Silicon Valley Bank’s Demise Pulled the Trigger of Banking Stocks’ Panic

The entire aftermath of SVB Financial Group (SIVB) collapse went from fundraising announcement to receivership in just two days when their fundraising effort exploded. Not long later, California state regulators took control of the bank, appointing the Federal Deposit Insurance Corporation or FDIC as the receiver on Friday.

First Republic Bank led a decline in bank shares Monday that came even after regulators' extraordinary actions Sunday evening to backstop all depositors in failed Silicon Valley Bank and Signature Bank and offer additional funding to other troubled institutions.

San Francisco's First Republic shares lost 60% in premarket trading Monday after declining 33% last week. PacWest Bancorp dropped 37%, and Western Alliance Bancorp lost 29% in the premarket. Zions Bancorporation shed 11%, while KeyCorp fell 10%. Bank of America lost 6% in premarket trading, while Charles Schwab tumbled 20% early Monday, March 13th.

Meanwhile, The Wall Street Journal (WSJ) reported that before SIVB fell out of favor in a classic bank run, its bookrunner Goldman Sachs (GS) struck a deal worth $95 a share on Thursday last week.

Its venture capital and start-up-oriented clients have lost confidence in the bank's ability to remain solvent. Venture capitalists also advised portfolio companies to flee, urging them to divest and exit SIVB quickly.

In the era of digital banking, customers no longer need to go to the bank to run money. So the speed of the collapse was unheard of in modern times, as SIVB abandoned fundraising attempts as it pursued a takeover.