(Bloomberg) -- US regulators arrived at the California offices of SVB Financial Group as the troubled lender struggled to stabilize its finances, according to people familiar with the matter.
Watchdogs from the Federal Deposit Insurance Corp. and Federal Reserve are looking into the impact of significant withdrawals, said the people who asked not to be identified discussing the private interactions. Officials at the offices on Thursday sought more insight into the bank’s predicament, the people said.
The bank, which is known as SVB, has played a key role in the Silicon Valley startup scene for years. Regulators’ arrival doesn’t mean that officials will take further action, or that the lender won’t be able to deal with the situation on its own.
The Fed and FDIC declined to comment. Representatives for SVB didn’t respond to multiple phone and email messages.
SVB — which for months has been adamant that it wouldn’t significantly restructure its balance sheet — stunned investors Wednesday when it said it would issue $2.25 billion of shares and booked a $1.8 billion loss on the sale of a large part of its available-for-sale securities. Several high-profile venture capital firms advised their portfolios to pull money from its Silicon Valley Bank.
The stock, which tumbled 60% on Thursday, plunged as much as 69% early Friday in New York before trading was halted. The company’s bonds posted record declines, igniting a broad selloff in bank shares around the world.
FDIC examiners last week went to the offices of Silvergate Capital (NYSE:SI) Corp., as the troubled crypto-friendly sought to avoid a shutdown. The firm ultimately announced Wednesday that it planned to voluntarily wind down bank operations and liquidate its lender.
Although the Fed, which oversees Silvergate and SVB, hasn’t commented on either lender, on Thursday the top US bank supervisor warned about the perils of becoming too focused on one sector. Michael Barr, the Fed’s vice chair for supervision, said that smaller firms could face heightened risks from becoming too exposed to any one industry.
“We tend to have a very light-touch approach to smaller institutions and so there is more of an impetus on them to be paying attention to the new and novel risks,” Barr said at an event in Washington. “We need to make sure they understand that.”