NEW YORK, March 14 (Reuters) – SVB Financial Group (SIVB.O) said on Tuesday that Goldman Sachs Group Inc (GS.N) was the acquirer of a bond portfolio on which it posted a $1.8 billion loss, a transaction that in motion the failure of SVB.
The portfolio loss was the reason why SVB, a technology-focused lender known as Silicon Valley Bank, attempted a $2.25 billion share sale last week using Goldman Sachs as an advisor. The capital increase was thwarted when savers fled and investors feared that SVB would have needed even more capital.
The portfolio that SVB sold to Goldman Sachs on March 8 consisted primarily of US Treasuries and had a book value of $23.97 billion, according to SVB. The transaction was conducted “at negotiated prices” and earned the bank $21.45 billion in proceeds, SVB added.
SVB became the largest bank to fail since the 2008 financial crisis and was taken over by US regulators on Friday.
Goldman Sachs’ bond portfolio purchase was handled by a division separate from the unit handling SVB’s stock sale, according to a source familiar with the matter.
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Jacob Frenkel, chairman of government investigations and securities enforcement practice at law firm Dickinson Wright, said such arrangements to address conflicts of interest are typical of major banks.
Edited by Lincoln Feast.
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