Silicon Valley Bank, one of the tech industry’s favorite lenders, is closing.

The California Department of Financial Protection and Innovation announced Friday that it was take over and close the struggling bank to protect deposits, appointing the Federal Deposit Insurance Corporation as receiver. The FDIC, in turn, formed a separate entity where all insured SVB deposits would be transferred.

The move came after a tumultuous morning during which trading in the bank’s shares ground to a halt on Friday after shares fell double-digits in pre-market trading, following a plunge of more than 60% on Thursday.

Other bank stocks also fell in trading on Thursday, underscoring investor concerns about broader risks to the financial industry.

Concerns over a run on the Santa Clara, California-based bank on the 16th largest bank in the country, have led stock market investors to also sell shares of other banks. The jitters around SVB followed news this week that Silvergate, a much smaller bank heavily focused on the cryptocurrency industry, announced plans to close.

Silicon Valley Bank did not respond to a request for comment.

The drama started earlier this week, when SVB revealed that sold about $21 billion worth of securities and proposed offering more than $1 billion in stock, all to raise funds for «general corporate purposes.»

That move surprised investors who wondered why the bank would need to abruptly raise so much money. It also raised concerns among depositors, many of whom suddenly wondered if their money was safe at Silicon Valley Bank, a lender known for helping finance the explosion of tech companies in the San Francisco Bay Area.

Thursday, The information reported that Silicon Valley Bank CEO Greg Becker was asking venture capital clients to «keep calm» when some tech founders began clarifying whether their companies had money in Silicon Valley Bank.

Concerns around SVB are linked to its concentration in the technology sector, an industry hit by high interest rates and the economic slowdown.

Many of the Santa Clara, California-based bank’s depositors are tech companies and venture capital funds, and it doesn’t rely on family savings accounts like banks familiar to the average American household.

Shares of some other prominent West Coast banks also fell sharply on Friday. First Republic Bank, a San Francisco-based lender whose clients include top Silicon Valley executives including Mark Zuckerberg, was down 17%. Shares of PacWest Bancorp, a Los Angeles-based bank, and Phoenix-based Western Alliance Bancorporation fell as much as 23%.

First Republic presenting a presentation to the Securities and Exchange Commission on Friday morning that it «reiterates [its] continued security and stability and strong capital and liquidity positions.

Speaking to House lawmakers on Friday, Treasury Secretary Janet Yellen said: «There are recent developments that concern some banks that I am monitoring very closely, and when banks experience financial losses, it is and should be a reason. of concern».

Economists weighed in on the crisis on Friday, with Cambridge University economist Mohamed El-Erian. tweeting that “currently the most vulnerable are those vulnerable to both interest rate and credit risk,” adding that “the systemic threat can be easily contained through careful balance sheet management and avoiding further policy errors.”

SVB’s technology-focused strategy has helped it take advantage of the massive growth in the industry before and during the pandemic. But overhiring during the public health crisis has more recently led the tech sector to institute sweeping layoffs, as the Federal Reserve sharply increased borrowing costs to cool inflation and raised expectations of an economic slowdown.

«The issue here is what is the ripple effect of problems outside the banking industry on the banks themselves.» said Mike Mayo, a banking analyst at Wells Fargo Securities. «The banks are still the heart of the economy, and if there are problems, the banks will feel it.»

Mayo warned that the banking system in general has stronger protections now than it did 15 years ago, due to policies implemented after the last financial crisis, such as regulations imposing stricter capital and liquidity requirements.

Silicon Valley Bank is subject to even more stringent regulations as one of the top 20 banks in the country by total assets. Like other member banks of the Federal Deposit Insurance Corporation, deposits at the bank are also insured up to $250,000 per depositor.