Silicon Valley Bank puts itself in harm’s way

The incident with Silicon Valley’s best-known bank, which was started over 40 years ago, may go down in the history of the area as the time when it hurt itself so badly that it had to be saved by another bank or it could have gone up in flames in one day.

We don’t yet know who the “white knight” will be, but you can bet there are plenty of discussions going on right now about who will step in and buy Silicon Valley Bank, a company whose shares have fallen by more than 80% in after-hours trading from where they were at the start of yesterday. Then why? not because the bank is disintegrating from the inside. Instead, because it badly mishandled some crucial messaging at the worst possible time.

Friends, this is an example of an own goal.

If you’re just getting caught up, the following happened: Due to increased interest rates, Silicon Valley Bank lost $1.8 billion when selling its investments in mortgage-backed securities and U.S. bonds. Given that its clientele, which consists primarily of startups, has far less money available to park at a financial institution at the moment, the bank is likewise dealing with declining customer deposits.