Silicon Valley Bank (SVB) Financial seeks bankruptcy protection as banking turmoil persists

Days after its former subsidiary Silicon Valley Bank (SVB) was taken over by US regulators. SVB Financial Group announced on Friday that it had filed for a court-supervised reorganization under Chapter 11 bankruptcy protection to seek purchasers for its assets.

The decision to start bankruptcy procedures was made as a result of the failure of immediate steps. To boost confidence to allay concerns about a financial contagion.

Big American banks’ stock prices declined between 1.5% and 2% on Friday in premarket trading.

Silicon Valley Bank was shut down by Californian regulators last Friday. Making it the worst collapse since Washington Mutual failed during the 2008 financial crisis.

The digital lender was compelled by an increase in yields. To sell a portfolio of treasuries and mortgage-backed securities to Goldman Sachs at a $1.8 billion loss.

It attempted to raise $2.25 billion in common equity and preferred convertible stock to close the gap. But worried customers withdrew deposits from the bank, causing $42 billion in withdrawals in a single day.

The defunct lender announced earlier this week that it intended to investigate strategic alternatives. For all of its entities, including the holding company, SVB Capital, and SVB Securities.

The company stated on Friday that the funds and general partner entities of SVB Securities and SVB Capital were not included in the Chapter 11 filing. And that it still intended to move forward with the process of evaluating alternatives for the businesses as well as its other assets and investments.

According to Reuters, the parent business was considering filing for bankruptcy protection in order to sell assets.

The business reported having around $2.2 billion in liquid assets on Friday. By the end of the previous year, it had $209 billion in assets.