Neil Wilson, Chief Market Analyst at Markets.com, said that the episode could be the “straw that breaks the camel’s back” for banks after worries about ever higher interest rates and a fragile U.S. economy.
The episode underscored the vulnerability of banks, many of which were propped up by taxpayers’ cash following the global financial crisis more than a decade ago. That crash and the economic fallout from the pandemic led central banks and governments to print trillions to support the economy but they are now seeking to rein that in.
Investors in SVB’s stock had fretted over whether the capital raise would be sufficient given the deteriorating fortunes of many technology startups that the bank serves. SVB’s CEO Gregory Becker had been calling clients to assure them their money with the bank is safe, according to two people familiar with the matter.
But some startups have been advising their founders to pull out their money from SVB as a precautionary measure, the sources added.