SVB Financial Group has filed for a court-supervised reorganization under Chapter 11 bankruptcy protection to seek buyers for its assets, days after its former unit Silicon Valley Bank was taken over by US regulators.
The move to commence bankruptcy proceedings comes as emergency measures to shore up confidence have so far failed to dispel worries about financial contagion.
The move by the parent company of SVB is an attempt to salvage value from two units, a broker-dealer and a technology investing business, that are separate from the main deposit-taking bank that failed last week, sending shockwaves around global financial markets.
SVB Financial said it had about US$2.2bn in cash and liquid securities, US$3.3bn of bond debt and US$3.7bn of preferred stock.
William Kosturos, chief restructuring officer for SVB Financial, said the bankruptcy process would allow the group “to preserve value as it evaluates strategic alternatives for its prized businesses and assets”.
Banking shares in Europe and the US resumed their downward path with Credit Suisse, which received a central bank bailout earlier this week, down a further 9%.
Data from Morningstar showed net outflows from Credit Suisse’s US and European managed funds topped US$450m between Monday and Wednesday, while Bloomberg reported the embattled Swiss lender was resisting overtures aimed at a merger with UBS.
In the US, First Republic Bank, itself a beneficiary of US$30bn of assistance from a number of Wall Street's leading names, also fell with shares down 16% in early trading in New York.
In London, banking share prices fell back after posting opening gains. Lloyds Banking Group PLC (LSE:LLOY), HSBC Holdings PLC (LSE:HSBA) and NatWest Group PLC (LSE:NWG) fell 1.8%, 2.4% and 1.6% respectively.
In New York bank stock prices also fell. Wells Fargo & Co slipped 3%, Bank of America Corp (NYSE:BAC) dipped 2.7% and JP Morgan Chase slid 2.8%.
The downbeat mood was reflected in Europe where Deutsche Bank AG (NYSE:DB) fell 2%, Banco Santander (LSE:BNC) SA fell 3% and BNP Paribas SA also declined 3%.