New capital from the stock sale would have helped bridge the roughly $1.8 billion in losses SVB incurred from the sale of about $21 billion of securities initiated to cover customers withdrawing deposits from the bank.
The Federal Deposit Insurance Corporation said it would retain all of the deposits from SVB for later disposition. The regulator historically has sought to merge failed lenders with a larger and more stable institution. Washington Mutual, for example, was sold to JPMorgan Chase. On Thursday, SVB and its underwriter Goldman Sachs raced to complete the share offering. While Goldman had secured enough interest in the convertible bond deal by mid-afternoon, the common stock sale was struggling as SVB shares slid, according to one person with knowledge of the matter.
By Friday morning, the sale of shares and convertible bonds had been postponed, according to people familiar with the matter. Some venture capital groups told the Financial Times they were concerned by the decline in the value of SVB’s shares and were advising some of their portfolio companies to consider withdrawing a portion of their deposits from the lender. However, others said they were not giving that advice to their portfolio companies.