London Daily

Focus on the big picture.
Thursday, Sep 11, 2025

Silicon Valley Bank Urges Clients To "Stay Calm" After 60% Stock Tumble

Silicon Valley Bank Urges Clients To "Stay Calm" After 60% Stock Tumble

The immediate risk for many banks may not be existential, according to analysts, but it could still be painful.
Silvergate Capital Corp.'s abrupt shutdown and SVB Financial Group's hasty fundraising have sent US bank stocks diving and tongues wagging across the industry: Could this be the start of a much bigger problem?

The issue at both of the once-highflying California lenders was an unusually fickle base of depositors who yanked money quickly. But below that is a crack reaching across finance: Rising interest rates have left banks laden with low-interest bonds that can't be sold in a hurry without losses. So if too many customers tap their deposits at once, it risks a vicious cycle.

Across the investing world, "people are asking who is the next one?" said Jens Nordvig, founder of market analytics and data intelligence companies Exante Data and Market Reader. "I am getting lots of questions about this from my clients."

Indeed, amid deposit withdrawals at SVB, its chief executive officer urged customers on Thursday to "stay calm."

The immediate risk for many banks may not be existential, according to analysts, but it could still be painful. Rather than facing a major run on deposits, banks will be forced to compete harder for them by offering higher interest payments to savers. That would erode what banks earn on lending, slashing earnings.

Small- and mid-sized banks, where funding is usually less diversified, may come under particular pressure, forcing them to sell more stock and dilute current investors.

'Terrible Kicking'

"Silicon Valley Bank is just the tip of the iceberg," said Christopher Whalen, chairman of Whalen Global Advisors, a financial consulting firm. "I'm not worried about the big guys but a lot of the small guys are going to take a terrible kicking," he said. "Many of them will have to raise equity."

Every bank in the S&P 500 Financials Index tracking major US firms slumped on Thursday, taking the benchmark down 4.1% - its worst day since mid-2020. Santa Clara-based SVB tumbled 60%, while First Republic Bank in San Francisco fell 17%.

Another S&P index tracking mid-size financials dropped 4.7%. The worse performer there was Beverly Hills-based PacWest Bancorp, down 25%.

Ironically, many equity investors had piled into financial stocks to ride out the Federal Reserve's interest-rate hikes, betting it would pave the way for lenders to earn more. For them, this week has been a shock.

"The cost of deposits rising is old news, we've seen that pressure," said Chris Marinac, an analyst at Janney Montgomery Scott. But suddenly "the market has really focused on it because there's an obvious surprise with the capital raise from Silicon Valley Bank."

SVB announced the stock offering as its clients - firms backed by venture capital - withdrew deposits after burning through their funding. The lender liquidated substantially all of the securities available for sale in its portfolio and updated a forecast for the year to include a sharper decline in net interest income.

Hours after CEO Greg Becker urged clients to "stay calm" on a conference call Thursday, news broke that a number of prominent venture capital firms, including Peter Thiel's Founders Fund, were advising portfolio companies to pull money as a precaution.

At Silvergate the problem was a run on deposits that began last year, when clients - cryptocurrency ventures - withdrew cash to weather the collapse of the FTX digital-asset exchange. After losses from rapidly selling securities, the firm announced plans Wednesday to wind down operations and liquidate.

US bank stocks also came under pressure this week after KeyCorp warned about the mounting pressure to reward savers. The regional lender lowered its forecast for growing net interest income in the current fiscal year to 1% to 4%, down from 6% to 9%, because of the "competitive pricing environment." Its stock fell 7% on Thursday.

'More Insulated'

Regulators talk openly about spending less time policing the balance sheets of small banks, giving them room to innovate, with some dabbling in financial-technology platforms or cryptocurrencies.

Authorities have instead devoted much of their time and attention since the 2008 financial crisis to ensuring the stability of large "systemically important" banks such as JPMorgan Chase & Co. and Bank of America Corp.

They've forced the biggest lenders to hold ever-larger amounts of capital aside - sometimes over the loud complaints of bankers - so that their health would be beyond reproach at moments like this. Smaller lenders by contrast have been handled with "a very light-touch approach," Michael Barr, the Fed's vice chair for supervision, said during a speech Thursday.

"There are obviously larger institutions that are also exposed to these risks too, but the exposure tends to be a very small part of their balance sheet," he said. "So even if they experience the same deposit outflows, they are more insulated."
Newsletter

Related Articles

0:00
0:00
Close
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Court Staff Cover Up Banksy Image of Judge Beating a Protester
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
Elon Musk Poised to Become First Trillionaire Under Ambitious Tesla Pay Plan
France, at an Impasse, Heads Toward Another Government Collapse
Burning the Minister’s House Helped Protesters to Win Justice: Prabowo Fires Finance Minister in Wake of Indonesia Protests
Brazil Braces for Fallout from Bolsonaro Trial by corrupted judge
The Country That Got Too Rich? Public Spending Dominates Norway Election
Nearly 40 Years Later: Nike Changes the Legendary Slogan Just Do It
Generations Born After 1939 Unlikely to Reach Age One Hundred, New Study Finds
End to a four-year manhunt in New Zealand: the father who abducted his children to the forests was killed, the three siblings were found
Germany Suspends Debt Rules, Funnels €500 Billion Toward Military and Proxy War Strategy
EU Prepares for War
BMW Eyes Growth in China with New All‑Electric Neue Klasse Lineup
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
US Justice Department Launches Criminal Mortgage-Fraud Probe into Federal Reserve Governor Lisa Cook
Escalating Drug Trafficking and Violence in Latin America: A Growing Crisis
US and Taiwanese Defence Officials Held Secret Talks in Alaska
Report: Secret SEAL Team 6 Mission in North Korea Ordered by Trump in 2019 Ended in Failure
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Florida Murder Case: The Adelson Family, the Killing of Dan Markel, and the Trial of Donna Adelson
×