Industry Updates

Finance sector ETFs sink on Silicon Valley Bank collapse

Crypto and private equity ETFs are also down significantly

Theo Andrew


ETFs tracking banks, cryptocurrencies and private equity have fallen dramatically following the collapse of lender US Silicon Valley Bank (SVB).

The 18th largest bank in the US went bust last Friday with US regulators stepping in late on Sunday to protect the depositors and stem the risk of contagion.

SVB’s share price plunged 60% on Thursday and a further 60% before the market opened on Friday before trading was finally halted, leading to a significant hit on several areas of the market.

US banks led the losses, with the iShares S&P US Banks UCITS ETF (BNKS) falling by 15.6% over the past week, followed by the Xtrackers MSCI USA Banks UCITS ETF (XUFB) which dropped 12%, according to justETF.

The broader US financial sector was also hit, with the iShares S&P 500 Financials Sector UCITS ETF (UIFS) falling 8.7% and the Xtrackers MSCI USA Financials UCITS ETF (XSFN) down 7.5%.

Cryptocurrencies also fell on the news after SVB’s collapse triggered a fall in the value of Circle’s USDC stablecoin.

Circle Internet Financial’s stablecoin broke its US dollar peg following the news it held $3.3bn of its circa $40bn of USD Coin Reserves in SVB.

As a result, 21Shares Crypto Basket Index ETP (HODL) fell 9.8% on Friday while the WisdomTree Crypto Altcoins was down 9.2% and the WisdomTree Crypto Mega Cap Equal Weight ETP was down 8.5%.

Elsewhere, private equity and fintech ETFs were also down on the news.

The iShares Listed Private Equity UCITS ETF (IPRV) dropped 8.9%, followed by the FlexShares Listed Private Equity UCITS ETF (FLPE) at -8.1%.

In the fintech sector, the Invesco KBW Nasdaq Fintech UCITS ETF (FTEK) was down 7.3% while the Global X FinTech UCITS ETF (FINX) and the Xtrackers MSCI Fintech Innovation UCITS ETF (XFSN) fell by 7.2% and 5.5%, respectively.

The run on SVB came after it said it lost $1.8bn on the sale of US Treasuries and mortgage-backed securities that it had piled into as interest rates were rising.

Investors were caught by surprise after SVB announced plans to raise more than $2bn to offset the losses last Wednesday.

Fears of contagion have spread globally. On Monday, HSBC announced plans to buy the UK arm of SVB, protecting thousands of tech firms’ deposits.

US regulators also moved to close Signature Bank, one of the biggest lenders in the crypto industry due to the rising risks of systemic failure, the US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation said in a joint statement.

It is the second crypto bank to close in little over a week after Silvergate Bank collapsed citing “recent industry and regulatory developments”.

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