First Republic leads rout in regional banks as SVB crisis raises fears about bond losses
is down about 15% for the week, which would be its worst week since March 2020.
SVB came under pressure after announcing on Wednesday that it had lost $1.8 billion on an asset sale and was looking to raise more capital. CNBC's David Faber reported on Friday that the fundraising effort had failed and that SVB was exploring a potential sale. But Faber also reported that the sale process was becoming difficult because of the rapid outflow of deposits from the bank.
While SVB's situation is somewhat unique because of its funding base focused on tech start-ups, other banks with large bond portfolios could face similar issues if they were forced to sell those bonds before maturity in order to raise funds. Treasuries have fallen in value the last 12 months as the Federal Reserve hiked rates eight times.Still, Wall Street analysts believe that the issues at SVB are. Shares of large banks like JPMorgan Chase and Citigroup saw smaller declines on Friday.
What's more, most of the assets involved are Treasuries, which are not at risk of default and will keep their value at maturity. The financial crisis of 2008-2009 involved mortgage-backed securities that collapsed in values from housing loan defaults.
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