Silicon Valley Bank collapse: Goldman Sachs bought its bond portfolio, says SVB

Goldman Sachs Group had bought Silicon Valley Bank Financial Group’s bond portfolio before the lender was placed into receivership by the federal regulators last week, according to SVB. The portfolio consisted mostly of US Treasuries, and had a book value of $23.97 billion. Its sale to Goldman Sachs fetched proceeds of $21.45 billion for SVB following negotiations, it said.  

SVB had launched a share sale to shore up its balance sheet after it was hit by a $1.8 billion loss on the sale of the portfolio. This eventually dampened confidence among investors and depositors, which ultimately caused SVB’s unraveling. 

SVB COLLAPSE PROBE

US prosecutors are investigating the collapse of Silicon Valley Bank, stated Reuters citing sources. The US Justice Department is probing the sudden demise of the bank that was shuttered on Friday last week. A parallel investigation has been launched by the Securities and Exchange Commission, as per a Wall Street Journal report. 

While the investigation might not result in allegations of wrongdoing, officers of the SVB Financial Group that owns the bank, are examined for stock sales. 

SEC Chair Gary Gensler on Sunday said in a statement the agency is particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors during periods of volatility.

Regulators are rushing to contain risks to rest of the sector after the demise of Silicon Valley Bank and Signature Bank. On Tuesday, Moody’s cut its outlook on the US banking system to ‘negative’ from ‘stable’. 

Also read: Silicon Valley Bank collapse fallout: Moody's changes outlook on US banking system to 'negative'