Financial markets across the world shuddered on Tuesday as news spread of Silicon Valley Bank (SIVB)'s request for $2.25 billion in fresh capital, sending markets into a tailspin. The KBW Bank Index plunged by 7% and the four biggest US banks lost a combined $52 billion in market value in one day.

This has been accompanied by an outflow of deposits from SIVB, which has seen its share price nosedive by a staggering 60%. This massive drop has cast a pall over the banking sector, with nearly $500 billion in deposits on the verge of being wiped out.

In an effort to avoid the same fate, First Republic Bank has announced they are taking precautionary steps through a large capital raise of $125 million. Despite this, share prices continue to slide, with stocks hitting their lowest levels in 15 years.

The Federal Reserve has acted to