SVB says Goldman Sachs was buyer of portfolio it booked losses on

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 booked a $1.8 billion loss, a transaction that set in motion the failure of SVB.

The loss on the portfolio was the reason SVB, a technology-focused lender known as Silicon Valley Bank, attempted a $2.25 billion stock sale last week using Goldman Sachs as an adviser. The capital raise was thwarted as depositors fled and investors fretted SVB would have needed even more capital.

The portfolio SVB sold to Goldman Sachs on March 8 consisted mostly of U.S. Treasuries and had a book value of $23.97 billion, SVB said. The transaction was carried out “at negotiated prices” and netted 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 U.S. regulators on Friday.

Goldman Sachs’ purchase of the bond portfolio was handled by a division that was separate from the unit that handled SVB’s stock sale, according to a source familiar with the matter.

Jacob Frenkel, chair of government investigations and securities enforcement practice at law firm Dickinson Wright, said such arrangements to handle conflict of interest are typical in major banks.
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