Startup-focused lender SVB Financial Group became the largest bank failure since the 2008 financial crisis on Friday, in a sudden collapse that roiled global markets and has sent investors and analysts rushing to audit the rest of the banking industry for more potential problems.

A Federal Deposit Insurance Corporation (FDIC) memo released on Friday said the California Department of Financial Protection and Innovation closed the bank after its stocks sputtered. The bank's operations will resume on Monday with the FDIC in charge.

The SVB's failure is the largest bank failure since the collapse of U.S. savings and loan association Washington Mutual in 2008, The Associated Press reported.

The genesis of SVB's collapse lies in a rising interest rate environment. As higher interest rates caused the market for initial public offerings to shut down for many startups and made private fundraising more costly, some SVB clients started pulling money out.

The problems at SVB, which quickly escalated after the bank said on Wednesday it would raise money, underscore how a campaign by the U.S. Federal Reserve and other central banks to fight inflation by ending the era of cheap money is exposing vulnerabilities in the market. The worries dealt a severe blow to the banking sector.

U.S. banks have lost over $100 billion in stock market value over the past two days, with European banks losing around another $50 billion in value, according to a Reuters calculation.

U.S. lenders First Republic Bank and Western Alliance said on Friday their liquidity and deposits remained strong, aiming to calm investors as their shares fell. Others such as Germany's Commerzbank issued unusual statements to reassure investors.

Some analysts forecast more pain for the sector as the episode spread concern about hidden risks in the banking sector and its vulnerability to the rising cost of money.

"There could be a bloodbath next week as banks are in trouble, the short sellers are out there and they are going to attack every single bank, especially the smaller ones," said Christopher Whalen, chairman of Whalen Global Advisors.

U.S. Treasury Secretary Janet Yellen met banking regulators on Friday and expressed "full confidence" in their abilities to respond to the situation, the Department of the Treasury said.

The White House said on Friday it had faith and confidence in U.S. financial regulators when asked about the failure of SVB. Cecilia Rouse, who chairs the Council of Economic Advisers, said the U.S. banking system was fundamentally stronger than it was during the 2008 financial crisis.

(With input from Reuters, Xinhua)