Bank run fear: SVB is said to be exploring a sell-off as Wall Street calls for a bailout

New York (CNN) SVB Financial Group is said to be exploring sale after sale of billions of dollars of assets to make its customers complete and send panic on Wall Street this week.

Reuters and CNBCCiting people familiar with the matter, they reported that the cash-strapped bank was considering a potential sale to a larger institution. SVB did not immediately respond to CNN’s request for comment.

shares SVB (SIVB) It was halted Friday morning after falling more than 60% in pre-market trading. The stock fell 60% on Thursday after the bank said it had to sell a portfolio of US Treasuries and $1.75 billion in stocks at a loss to cover rapidly declining customer deposits — essentially facing a bank run.

A relatively unknown bank outside Silicon Valley, SVB lends to high-risk tech startups that have been hit recently by high interest rates and dwindling venture capital.

The bank is involved with nearly half of all venture-backed technology and healthcare companies in the United States, many of which have withdrawn deposits from the bank as rising interest rates have fueled concern that the bank may not be able to get all of its customers’ money. If they withdraw their deposits en masse.

The crisis at SVB prompted billionaire Wall Street hedge fund manager Bill Ackman to compare the situation to Bear Stearns, the first bank to collapse at the start of the 2007-2008 global financial crisis. Ackman said in a The series of tweets that SVB may require a bailout and called on the US government to intervene to protect customer deposits and prevent harm to the bank’s tech startup customers.

“The risk of failure and deposit losses here is that the next least capitalized bank races and fails and the domino continues to fall,” Ackman wrote.

Contagion fears seemed to subside a bit on Friday: although SVB cut prevailing bank stocks on its side on Thursday, most other bank stocks were flat. However, investors fear that the sudden deposit crisis in SVB may not be a one-time event.

Several other bank stocks were halted on Friday, including First Republic, PacWest Bancorp, and Signature Bank.

SVB’s sudden fall mirrors other risky bets that emerged in last year’s market turmoil. Cryptocurrency-focused lender Silvergate said Wednesday that it is Liquidations It will liquidate the bank after it suffers a financial hit due to turmoil in digital assets.

When interest rates were close to zero, large banks collected Treasury bills and bonds. Now, with the Federal Reserve raising interest rates to fight inflation, those bonds are worth much less and banks are taking losses. For SVB, which said it partners with nearly half of all venture-backed tech and healthcare companies, cash-starved startups are feeling the pinch.

The Treasury Department told CNN on Friday that it is monitoring the situation as financial strains at Silicon Valley bank’s parent company raise concerns about the broader health of US banks.

“The Treasury is aware of recent developments. The Treasury will remain in contact with regulators as appropriate,” a Treasury spokesperson said in a statement.

— CNN’s Matt Egan contributed to this report