Silicon Valley Bank's Bankruptcy, Plunging Stock Price, and Market Capitalization

Silicon Valley Bank (SVB) declared bankruptcy on Friday, March 10, 2023. The collapse of the bank that funded startups occurred within 48 hours of the company experiencing a capital crisis.

Customer rights remain. They will gain access to their deposits on Monday, March 13, 2023, United States (US) time. Regulators decided to support customer deposits to prevent a deeper financial collapse.

This decision was made by the Federal Deposit Insurance Corporation (FDIC) and the US central bank, the Federal Reserve, after consulting with President Joe Biden.

According to a joint statement by US Treasury Secretary Janet Yellen, Fed Chair Jerome Powell, and FDIC Chair Martin Gruenberg on Sunday evening, March 12, 2023, they approved the SVB resolution. They ensured this resolution would not harm American taxpayers and that all depositors would receive their funds in full.

"Today, we are taking decisive action to protect the US economy by strengthening public confidence in our banking system," the statement said, as quoted by Katadata from Reuters, Monday, March 13, 2023.

This step, they said, will ensure that the US banking system continues to perform its vital role in protecting deposits and providing credit access to households and businesses in a way that fosters strong and sustainable economic growth.

Senior US Treasury Department officials told reporters that SVB would not be bailed out, but customers would still be protected. SVB's equity and bondholders will be wiped out.

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During the crisis, SVB's share price and market capitalization plummeted.

According to the Wall Street Journal (WSJ), SVB's stock price on March 6, 2023, was US$283 per share. The following day, it fell slightly to US$267. This figure remained until the next day, March 8, 2023.

However, on March 9, 2023, the share price slipped to US$106, down 161.79 points or 60.41%. This price persisted until March 10, 2023. SVB was then closed to protect customers. This also caused the Wall Street stock market index to fall by more than 1% on Friday, March 10, 2023.

The same happened to SVB's market capitalization. Data from Companies Market Cap shows a decline in value since 2022. The average market capitalization in 2022 was US$13.60 billion. This figure fell by 65.86% compared to the 2021 period, which was US$39.84 billion.

Market capitalization on March 13, 2023, also plummeted by 53.85% or US$6.27 billion. This achievement was the lowest in the last five years. On March 4, 2023, its capitalization was still US$16.84 billion.

SVB also experienced its lowest market capitalization in 2018, at US$9.98 billion (-19% from 2017).

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