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European banking stocks sold off sharply in early trade Friday as jitters surrounding U.S. bank SVB Financial — which plunged 60% Thursday — spread around the world.

It followed an announcement by the tech-focused lender of a capital raise to help offset bond sale losses.

The Euro Stoxx Banks index was on pace for its worst day since June, led by a decline of more-than 8% for Deutsche Bank. Societe Generale, HSBC, ING Groep and Commerzbank all fell more than 5%.

Silicon Valley Bank caters heavily to startup firms, particularly venture-backed tech and life sciences companies in the U.S. The 40-year-old company was forced into a fire sale of its securities on Thursday, dumping $21 billion worth of holdings at a $1.8 billion loss while raising $500 million from venture firm General Atlantic, according to a financial update late Wednesday.

The company said in a letter from CEO Greg Becker on Wednesday that it had sold “substantially all” of its available-for-sale securities and was aiming to raise $2.25 billion through common equity and convertible preferred shares.

The U.S. Federal Reserve has hiked interest rates aggressively over the past year, which can cause long-dated bond values to fall, and SVB plans to reinvest proceeds from its sales into shorter-term assets.

Billionaire investor and Pershing Square CEO Bill Ackman said in a tweet on early Friday that should SVB fail, it could “destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash.”

“If private capital can’t provide a solution, a highly dilutive gov’t preferred bailout should be considered.”

Russ Mould, investment director at British investment platform AJ Bell, said SVB’s announcement should not have come as a “major surprise” after a period in which “appetite from lenders and investors towards this part of the market has dried up.”

“However, in a heavily interconnected banking industry it’s not so easy to compartmentalise these sorts of events which often hint at vulnerabilities in the wider system. The fact SVB’s share placing has been accompanied by a fire sale of its bond portfolio raises concerns,” Mould said.

“Lots of banks hold large portfolios of bonds and rising interest rates make these less valuable — the SVB situation is a reminder that many institutions are sitting on large unrealised losses on their fixed-income holdings.”

This is a breaking news story and will be updated shortly.

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