Silicon Valley Bank shares halted after it pauses stock sale

Trading in shares of US lender Silicon Valley Bank were suspended on Friday as it abandoned a $2.25bn capital raising meant to cover recent losses in its bond portfolio.

SVB shares were halted before the official opening of trading on New York’s Nasdaq exchange. California-based SVB had hoped to price the $2.25bn share and convertible bond sale before market open but has now paused the effort, according to people with knowledge of the matter.

The company is exploring a potential sale, one of the people said.

SVB did not immediately respond to a request for comment.

New capital from the stock sale would have helped bridge the roughly $1.8bn in losses SVB incurred from the sale of about $21bn of securities initiated to cover customers withdrawing deposits from the bank.

It planned to sell $1.25bn of its common stock to investors and a further $500mn of mandatory convertible preferred shares, which are slightly less dilutive to existing shareholders.

The banking group’s troubles stem from a decision made at the peak of the tech boom to park $91bn of its deposits into long-dated securities such as mortgage bonds and US Treasuries, which were deemed safe but are now worth $15bn less than when SVB purchased them after the Federal Reserve aggressively raised interest rates.

On Thursday, SVB shares registered their biggest-ever decline, wiping $9.6bn from the banking group’s market capitalisation. SVB shares had been indicated to open down more than 60 per cent in pre-market trading before the halt was announced.

Additional reporting by Brooke Masters in New York