What: Shares of SVB Financial Group (NASDAQ:SIVB) plunged nearly 11% on Friday, after the U.K.'s shocking vote to leave the European Union.
So what: As the bank holding company for Silicon Valley Bank, SVB Financial Group couldn't be less exposed to what happens in Europe. After all, its primary business is serving as a banker to American-based technology companies, most of which are based in Silicon Valley -- thousands of miles from European shores.
That doesn't mean the bank is necessarily safe from macroeconomic factors. The bull thesis for SVB Financial Group is that its balance sheet is primarily funded by non-interest bearing deposits and other costless funding sources. Approximately 79% of its total balance sheet funding was non-interest-bearing as of the end of the first quarter of 2016.
Now what: With Brexit comes a reduced probability of higher rates in the United States. In fact, traders were pricing in a 10% probability of a Federal Reserve rate cut in July, according to Bloomberg.
That's an incredible about-face from just weeks ago, when a June rate increase seemed likely. With increased rates off the table, asset-sensitive institutions from banks to brokerage firms took a dive on Friday. SVB Financial Group wasn't spared from the sell-off.