NEW YORK CITY, March 14 (Reuters) – SVB Financial Group ( SIVB.O) stated on Tuesday that Goldman Sachs Group Inc ( GS.N) was the acquirer of a bond portfolio on which it scheduled a $1.8 billion loss, a deal that set in movement the failure of SVB.
The loss on the portfolio was the factor SVB, a technology-focused loan provider called Silicon Valley Bank, tried a $2.25 billion stock sale recently utilizing Goldman Sachs as a consultant. The capital raise was prevented as depositors ran away and financiers worried SVB would require much more capital.
The portfolio SVB offered to Goldman Sachs on March 8 consisted primarily of U.S. Treasuries and had a book worth of $2397 billion, SVB stated. The deal was performed “at worked out rates” and netted the bank $2145 billion in earnings, SVB included.
SVB ended up being the biggest bank to stop working given that the 2008 monetary crisis, and was taken control of by U.S. regulators on Friday.
Goldman Sachs’ purchase of the bond portfolio was dealt with by a department that was different from the system that managed SVB’s stock sale, according to a source knowledgeable about the matter.
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Jacob Frenkel, chair of federal government examinations and securities enforcement practice at law office Dickinson Wright, stated such plans to deal with dispute of interest are common in significant banks.
Modifying by Lincoln Banquet.
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