March 9 (Reuters) - SVB Financial Group (SIVB.O) scrambled on Thursday to reassure its venture capital clients their money was safe after a capital raise led to its stock collapsing 60% and contributed to wiping out over $80 billion in value from bank shares.
SVB, which does business as Silicon Valley Bank, launched a $1.75 billion share sale on Wednesday to shore up its balance sheet. It said in an investor prospectus it needed the proceeds to plug a $1.8 billion hole caused by the sale of a $21 billion loss-making bond portfolio consisting mostly of U.S. Treasuries. The portfolio was yielding it an average 1.79% return, far below the current 10-year Treasury yield of around 3.9%.
Investors in SVB's stock fretted over whether the capital raise would be sufficient given the deteriorating fortunes of many technology startups that the bank serves. The company's stock collapsed to its lowest level since 2016, and after the market closed shares slid another 26% in extended trade.
SVB's CEO Gregory Becker has been calling clients to assure them their money with the bank is safe, according to two people familiar with the matter.
Some startups have been advising their founders to pull out their money from SVB as a precautionary measure, the sources added. One of them is Peter Thiel's Founders Fund, according to one of the sources.
One San Francisco-based startup told Reuters they successfully wired all their funds out of SVB on Thursday afternoon, and the funds had appeared in their other bank account as a "pending" incoming wire by 4 pm Pacific Time on Thursday.
However, the Information publication reported the bank told four clients that transfers could be delayed.
SVB did not respond to multiple requests for comment.