Silicon Valley Bank shares halt after sharp drop

Trading in shares of Silicon Valley Bank was suspended on Friday as the U.S. lender abandoned a $2.25 billion fundraiser intended to cover recent losses in its bond portfolio.

SVB shares were halted ahead of the official opening of trading on the Nasdaq in New York. California-based SVB had hoped to price the $2.25 billion stock and convertible bond sale before the market opened, but has now suspended efforts, according to people with knowledge of the matter.

The company is investigating a potential sale, one of the people said.

SVB did not immediately respond to a request for comment.

New capital from the sale of shares would have helped to offset the losses of approximately $1.8 billion that SVB suffered from the sale of approximately $21 billion of securities insider to cover customers withdrawing deposits form the bank.

It planned to sell $1.25 billion of its common stock to investors and an additional $500 million of mandatory convertible preferred stock, which is slightly less dilutive for existing shareholders.

The banking group’s problems stem from a decision made at the height of the tech boom to put $91 billion of its deposits in long-term securities such as mortgage bonds and U.S. Treasuries, which were deemed safe but worth now $15 billion less than when SVB bought them after the Federal Reserve aggressively raised interest rates.

On Thursday, SVB shares posted their biggest drop ever, wiping $9.6 billion off the banking group’s market cap. It had been reported that SVB shares would open more than 60% in premarket trading ahead of the announcement of the shutdown.

Additional reporting by Brooke Masters in New York

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