Open to the Idea: Musk on Buying Collapsed SVB
Seems like the Tesla owner is up for another takeover in his kitty. Musk in response to a tweet by Razor CEO Min-Laing Tan said that he is “open to the idea” of buying the collapsed Silicon Valley Bank (SVB) and turning it into a digital bank.
On Friday, US regulators announced the shutdown of Silicon Valley Bank and seized all its assets. The shutdown has started to ripple to the global market with major world indices seeing a drastic pull out of money by investors globally.
As the FED has been hiking the interest rates to rein inflation in the US, it has decreased the morale and the risk appetite of investors prompting the liquidation of assets. This coerced the SVB to look for ways to meet the sudden liquidity demands.
It all started on Thursday as the bank announced a stock offering and offloaded securities to raise much-needed cash as it struggled with falling deposits. Hence, the bank sold its bond portfolio mostly of US Treasuries at the loss. Hereafter, it announced it would sell $2.25 billion in common equity and preferred convertible stock to fill its funding gap. It triggered investors to sell out shares and led to a drastic fall in prices. They collapsed losing over 60-70% value in the session.
The closure was issued by the California Department of Financial Protection and Innovation. SVB was placed under the receivership of the Federal Deposit Insurance Corporation (FDIC).
It is worth noting that Silicon Valley was the US’s 16th largest bank, with a total of 17 branches in California and Massachusetts. The bank during its closing on March8th had a negative balance of $958 million, the FDIC said.
Musk in 2022 procured the widely use social media platform – Twitter after months of uncertainity and drama.