The CE 100 Stock Index lost 6.7% after Silicon Valley Bank fell following a turbulent week that raises issues about FinTechs and startup funding. It is yet unknown what the consequences of SVB’s failure will be and how broad they will be.
LendingClub saw a weekly loss of 18.7% in that category. According to the information provided here, the business said in an SEC filing that it had around $21 million in deposits at Silicon Valley Bank and added that the FDIC process will apply to the recovery of the cash.
Concerns of Contamination
The company also stated that the deposits are “not material” to the company’s liquidity position or capital levels (LendingClub lists $8 billion in assets); however, the SEC filing sheds light on the numerous unknowns in tech banking at the moment, including when (or possibly even whether) SVB clients will be made whole.
The SVB revelation prompted investors to drive down the price of rival banks’ shares. According to Reuters, investors adopted defensive positions last week against a number of banking companies, which led to a 15.4% decline in the price of Ally Bank shares (via put options).
Even some of the biggest names in banking, including J.P. Morgan and Citigroup, lost ground this week. J.P. Morgan lost 7%, Citigroup lost 7.7%, and Goldman Sachs lost 8.2%.
The banking segment’s decline was followed by a 9.2% decrease in the Pay and Be Paid Pillar. Affirm dropped 23.9% after announcing this week that it is leaving Australia on its website. In 2021, the service provider began operations in that nation by strengthening its alliance with Peloton.
