I think most here are missing on how SVB got into this spiraling problem.
Higher Interest rates - impacts all Banks. Not unique to SVB.
Most Banks take deposits from Joe, Jane and Business down the street and then put that money in either long duration bonds of some sorts or loan it out to other Businesses, mortgages (Residential or Commercial). Thats how most banks make money. With sprinkles of fees and credit card business here & there. Nothing specific to SVB.
What was unique to SVB (and few more banks in SF / Bay area) is that it catered to start-ups. And mostly Tech start-ups. If anyone is keeping up with news, barely any new money is flowing INTO tech start-ups. It has all dried up. But these start-up are still burning money. To the tunes of billions every month - to make payrolls and fund their sales and marketing operation. So they have been withdrawing from SVB for last several months. In normal times new deposits balance out the withdrawal. But not now.
With this deficit, SVB tried to increase the cash cushion by selling AFS (available for sale) securities - to the tune of $18B. They incurred $1.8Billion loss on that sale.
They tried to cover this loss by selling equity and convertible bonds On Wed/Thursday. That raised the eyebrows across their customer base (VCs and start-ups). Who then withdrew $40Billion by Thursday.
That was Wednesday/Thursday. Rest is history.
https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html
From the article above:
"The roots of SVB’s collapse stem from dislocations spurred by higher rates. As startup clients withdrew deposits to keep their companies afloat in a chilly environment for IPOs and private fundraising, SVB found itself short on capital. It had been forced to sell all of its available-for-sale bonds at a $1.8 billion loss, the bank said late Wednesday."