Bank stocks plunge after implosions at Silicon Valley Bank and Silvergate Capital send 'shock waves' through the sector
. The KBW Bank Index fell 7.7%, its biggest decline since June 2020.
The implosion at SVB Financial happened after the company lowered its guidance, announced a $2.3 billion capital raise, andthat it bought when interest rates were near record lows. The multi-pronged announcement caught investors by surprise. "Part of the problem is Silicon Valley [Bank] had been telling investors up until a couple weeks ago that their guidance was intact. There was no reason to believe this announcement was going to hit," Keefe, Bruyette & Woods' head of equity trading RJ Grant told Insider on Thursday.
"It's a little bit unnerving on a couple different levels: one at the micro level with their management, and two at the macro level, like if they weren't being dishonest, this [negative] deposit flows happened very suddenly," Grant said.
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