Course:MGMT405 2023W2/Case-2iii

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Silicon Valley Bank Corporate Governance Failure

Company Alternative Logos
Industry Financial Services[1]
Ticker SIVB[2]
Founded 1983 [3]
Founders Bill Bigger Staff - Robert Medearis[3]
Current

Ownership

First Citizens Bank

(acquired March 27, 2023) [4]

Headquarters Santa Clara, California, U.S.[5]

Background and Early Growth

Silicon Valley Bank Head Office in Santa Clara, California

Silicon Valley Bank Financial Group (SVBFG), founded in 1983 by Bill Biggerstaff and Robert Medearis opened its first office in San Jose, California, aiming to serve the underrepresented tech startups in Silicon Valley [3]. This was a niche market at the time, that was unfamiliar to traditional banks as they failed to understand the needs and wants of startups in the technology and life science sectors [3]. This opened the door for Silicon Valley Bank (SVB) to innovate the banking sector, by focusing on these underserved clients. By 1987, SVB went public on the Nasdaq, followed by an IPO in 1988 that raised $6 million in equity[3]. Following this the bank saw rapid growth, and they expanded across the U.S. during the late 80's and early '90s, and by 1996 they had offices in 15 states[6].

The DotCom Era saw SVB playing a crucial role in supporting emerging technology companies, managing to withstand the sector's dramatic downturn in 2001 when the bubble burst. Following this, SVB began focusing on international expansion, hoping to bring their unique value proposition to countries where it was most in demand. This international expansion began with opening offices in Israel (2008), the United Kingdom and China (2012), Ireland (2016), Germany (2018), followed by Canada and Denmark (2019), which marked the end of their international expansion[6].

Alongside their traditional international expansion and continued focus on technology and life sciences, VP Rob McMillan and CEO Greg Becker pushed for SVB to diversify their investments and began acting as a source of funding and deposits for Napa valley wineries. This tactic was marked for being a key part in building the SVB brand, and connecting it to Silicon Valley entrepreneurs by showing local involvement.

By the end of 2022, SVB boasted $209 billion in assets and $175 billion in deposits, with a claim that over 44% of US venture-backed technology and healthcare IPOs banked with them[3]. Despite being one of the top 20 U.S. banks, SVB continued to retain a unique position, different from the traditional banks like Chase or Wells Fargo. They continued to stay true to their roots by serving startups, technology companies, and healthcare firms, that still did not get the special recognition and care they needed from the large traditional banks, offering them services like payroll management and small lines of credit to companies that were yet to be cash-flow positive. This approach helped SVB establish strong ties with the venture capital community, fostering long-term relationships with a diversified client base, while still operating with a local focus that was reminiscent of early 20th century banks[3].

A Swift Fall: The Rapid Collapse of Silicon Valley Bank

Covid-19 Pandemic Impact (2020-2022)

2020

  • The onset of the pandemic created a peculiar economy that centered around a technology sector boom, while other areas of the market suffered, continuing all the way through the heart of the pandemic. [7]
  • As money and investment flooded into the technology and healthcare sector Silicon Valley Bank's deposit base tripled in size as their Venture Capital (VC) and technology companies flourished due to exponential increases in cash flow. [8]

2021

  • The bank experienced unprecedented growth due to low interest rates and high liquidity in the market, their depositors were obtaining liquidity through:
    • IPOs, Secondary Offerings, SPAC fundraising, reinvigorated Venture Capitalist Investments, and Acquisitions.[1]
  • Between year end 2018 and year end 2021 SVB assets grew by 271% in comparison to the banking industry average of 29% growth during the same period.[1]
  • Between 2017 and 2019 SVB total assets grew from $51 billion to $71 billion. [1]
  • In comparison between 2019 and 2022 SVB total assets grew from $71 billion to $212 billion, showing unprecedented parabolic growth that far outpaced the industry average growth index as can be seen in the chart titled (Silicon Valley Bank and Banking Industry Asset Growth Comparison). [1]
Silicon Valley Bank and Banking Industry Asset Growth Comparison (2017: Q4 = 100) Year-End Values[1] (Figure 1)
Date SVB Total

Assets (Thousands $)

SVB

Asset Growth Index

Industry

Asset Growth Index

12/31/2017 51,218,567 100.00 100.00
12/31/2018 57,020,489 111.33 102.71
12/31/2019 71,384,015 139.37 106.37
12/31/2020 116,046,446 226.57 123.09
12/31/2021 211,483,000 412.90 132.94
12/31/2022 211,786,000 413.49 132.32

Investment Strategy and Risk Management

2020-2021

  • Silicon Valley Bank invested heavily in long-term government bonds and mortgage-backed securities (MBS) which provided small but reliable returns during periods with low interest rates. [8]
    • As seen in figure 2 - 2020 saw a rapid decline in interest rates to near 0, which was then sustained throughout the entirety of 2021.[9]
Federal Funds Rate - Historical Annual Yields Data [9](Figure 2)
Year Average Yield Year Open Year High Year Low Year Close
2023 5.03% 4.33% 5.33% 4.33% 5.33%
2022 1.68% 0.08% 4.33% 0.08% 4.33%
2021 0.08% 0.09% 0.10% 0.04% 0.07%
2020 0.36% 1.55% 1.60% 0.04% 0.09%

2022

  • As interest rates reversed and began to rise, SVB faced significant unrealized losses on their Held-to-Maturity (HTM) securities and Available-for-Sale (AFS) securities portfolios.[1]
  • Due to SVB's overdependence on long-term HTM securities and poor risk management, they limited their ability to adjust their investment portfolio in response to the changing interest rate environment. [1]
  • Despite the growing risks, SVB's management and board failed to adequately manage the liquidity and interest rate risk, even removing numerous risk hedges during the same period, making them more vulnerable to rising interest rates. [1]
  • Venture Capital activity falls sharply due to a broader pullback in the technology investment environment, driven by lower investor risk appetite due to rising interest rates, and concerns for the future of the economy. [1]
  • Technology and healthcare sector depositors are forced to begin drawing on their deposits as VC investment dwindles, and the economic spending environment reverses, beginning to stress SVB's liquidity. [1]

December 31, 2022

  • SVB investment division Held-to-Maturity securities [1]portfolio had a weighted average duration of 6.2 years, with a majority of the HTM portfolio consisting of agency MBS with a maturity of 10 years or more. [1]

The Curtain Drops - Onset of the Crises

March 8, 2023

  • SVB announces a restructuring plan due to a $1.8 billion loss from the early sale of their HTM and AFS securities that they were forced to sell due to increased depositor demand as interest rates continue to climb and the technology and healthcare sector boom dries up.[8]
  • In tandem with loss announcement SVB announces a proposed plan to raise $2.25 billion in an equity offering in an attempt to shore up their balance sheet and reinstill investor confidence. [1] [8]
  • SVB guides investors to expect lower growth and income for the 2023 fiscal year as the tech sector slows down. [1]
  • SVB acknowledges the possibility that credit rating agencies Moody's and S&P are considering negative ratings actions, which would be the first rating change for SVB since 2007. [1]
  • Silvergate Capital Corporation announces their intention to wind down operations, voluntarily liquidating Silvergate Bank following falling deposits, and, increased credit exposure. [1]
    • This perceived collapse compounded the negative market sentiment instilled by SVB's announcement, further damaging market trust. [1]

March 9, 2023

  • SVB's March 8th announcement signals financial distress to debtors, and they begin withdrawing funds at an accelerated rate. [1]
    • Market sentiment and panic grew, fueled by social media, with notable investor Michael Burry tweeting "It is possible today we found our Enron".[8]
  • Within their operating hours SVB witnessed more than $40 billion in deposit outflows. [1]
    • Driven by SVB's concentrated network of Venture Capitalists and technology sector firms withdrawing their deposits in a coordinated manner at an unprecedented rate. [1]
  • SVB shares fall more than 60% in response to investors concern about the bank's distressed financial position. [8]

March 10, 2023

California Department of Financial Protection and Innovation Logo

March 11, 2023

  • Prominent investors and tech executives criticize the perceived lack of government action to rescue SVB and its depositors beyond the standardized guarantee of $250,000 for each account held with the bank, and begin a 48-hour clock pressuring the government to respond before they witnessed further widespread financial collapse. [8]
    • Approximately 94% of total deposits were uninsured with Silicon Valley Bank due to deposit size exceeding $250,000. [1]

March 12, 2023

  • In response to Silicon Valley Bank Collapse the market sentiment turns south and New York Signature Bank begins fearing of a bank run due to their new acceptance of risky cryptocurrency deposits. [8]
  • FDIC, Treasury Department, and the Federal Government respond to outcry, telling all depositors in Silicon Valley bank and New York Signature Bank that the FDIC would protect all their funds, including those that exceeded the $250,000 limit.
  • The Fed's announce a new emergency Bank Term Funding Program (BTFP) designed to cover deposits at risk, and restore more confidence in the financial system. [10]
    • the BTFP is designed to allow distressed banks to borrow funds at favourable terms directly from the Fed, rather than being forced to generate cash for depositors by selling premature / underwater securities as SVB had been forced to do. [8]

March 13, 2023

  • United States President Joe Biden makes an announcement to quell the masses claiming "Americans can rest assured that our banking system is safe" and "your deposits are safe".[8]
  • Despite the presidential message First Republic Bank stock plummeted 65% before trading was halted to mitigate further financial damage, and Charles Schwab - the 8th largest US bank dropped 11%. [8]
  • The Federal Reserve Board announces a review of the supervision and regulation of Silicon Valley Bank in light of its failure and collapse. [8]

March 14, 2023

  • Bank stocks bounce back in early morning trading - erasing much of the losses from the day prior. [8]
    • First Republic Bank climbs back 60% [8]
      • First Republic Bank continued to fight off their initial stock devaluation until May 1st, 2023, when the FDIC announced their closure and the sale of their deposits and assets to JPMorgan Chase [11]
    • Charles Schwab rose by 9%[8]
  • A stabilized market, a recovering trading system, and a successfully implemented Federal Bank Term Funding Program (BTFP) marks the end of Silicon Valley Bank's collapse and systemic aftershocks, just six days after it began.

Key Players Responsible for SVB Collapse

Greg Becker, CEO of Silicon Valley Bank

Greg Becker, CEO

Greg Becker was CEO of Silicon Valley Bank (SVB) from 2011 until its collapse. SVB's investment strategies and risk management practices came under scrutiny as rapid interest rate increases by the Federal Reserve devalued the bank's bond portfolio, highlighting a failure to hedge against interest rate risk adequately[12] To stabilize the situation, Becker sent a letter to clients urging calm and assuring them of the bank's stability[13]. This communication did little to calm the crisis, SVB was amid a bank run as clients and investors rapidly withdrew their funds[13]. In the period leading up to SVB's collapse, Becker sold 12,451 company stock worth $3.6 million[14]. This move raised questions after the bank's financial troubles became public.

The SVB Board of Directors

The board of directors played a key role in the collapse of Silicon Valley Bank (SVB), as highlighted by significant oversight and risk management challenges, notably through the prolonged absence of a Chief Risk Officer (CRO) during a volatile market environment.

  • Laura Izurieta, the former CRO, stepped down in April 2022, with a formal departure in October, and it was in January of the following year that Kim Olson was appointed as her successor[15]. This gap in leadership in risk management occurred as SVB faced increased pressures from rising interest rates and a slowdown in venture capital cash flow and deposits.

A sub committee of the SVB Board known as The Risk Committee, was tasked with overseeing all of SVB's risk management practices[16]. This sub committee was comprised of seven members from SVB's Board and other Board sub committees[16]. With the absence of a CRO during this crucial period questions were raised about concerns in SVB's risk management capabilities[17].The board of directors' failure to ensure adequate risk oversight significantly contributed to SVB's downfall, primarily due to poorly managed bond investment strategies and a lack of readiness for the hikes in federal interest rates.

  • Such errors included a substantial investment in long-duration bonds without appropriate hedging against the risk of rising interest rates[18]. As interest rates climbed, the value of these bonds drastically fell, resulting in significant unrealized losses. This issue was magnified by SVB's concentrated business model, which lacked diversification and made the bank especially susceptible to specific sector downturns and rapid market changes[19].

Daniel Beck, CFO

Daniel Beck, SVB's CFO, was a pivotal figure in changing the bank's financial risk management models, particularly concerning how the bank managed interest-rate risk[15].

  • Beck advocated revising the bank's projections to assume longer consistency in cash flow from deposits, which significantly softened the projected impact of rising interest rates on future cash flows[15]. This change, which made some bank officials uncomfortable despite being supported by historical deposit data, was approved by the Asset Liability Management Committee[15]. Officials later scrutinized these adjustments as a "textbook case of mismanagement," contributing to the bank's failure[15].

Who was most responsible?

From our teams thorough analysis of SVB's governance and decision making it is of our opinion that The Board of Directors had significant responsibility for the bank's rapid collapse, due to several key oversights in their risk management practices.

  • Absence of a Chief Risk Officer (CRO): For nearly a year, SVB operated without a Chief Risk Officer, leaving a large hole in its risk management structure at a time when the bank's risk committee meetings had well over doubled[12]. The absence of a CRO significantly compromised the bank's ability to navigate and effectively communicate the evolving risks associated with rapidly rising interest rates.
  • Inadequate Board Expertise in Risk Management: The board's risk committee lacked sufficient risk management expertise. Large banks like SVB are legally required to have a risk committee with experienced members capable of managing large-scale financial risks[12]. SVB's board had the committee but not the experience, with only one risk committee member having experience adjacent to risk management[16]. Unsurprisingly, no member of this committee had ever held a senior role in risk management[16]. This lack of risk management expertise clearly hindered the board's ability to effectively oversee and mitigate risks.
  • Overlooking Regulatory Warnings: The Federal Reserve had issued multiple warnings to SVB regarding its risk management systems years before the bank's collapse[20]. Despite these warnings, the bank and its board failed to address the cited deficiencies adequately, demonstrating a disregard for regulatory feedback and an underestimation of the risks posed by its investment strategies during a period of rising interest rates.

Key Stakeholders

Depositors

Depositors flew into a panic after learning of SVB's $1.8 Billion dollar loss on a sale of bonds, rushing to withdraw funds over fears that deposit could not be covered[21]. Depositors found themselves exposed due to the fact the FDIC (Federal Deposit Insurance Corporation) is only obligated to insure deposits up to $250,000, which the vast majority of SVB's clients exceeded[3][22]. Fortunately for depositors, on March 12, 2023 the FDIC responded to the crisis by guaranteeing full recovery of all deposits both insured and uninsured[23].

Borrowers

A major portion of SVB's clients were tech startups who had borrowed from the bank to fund their business[24]. Because of SVB's unusual requirements around venture debt line, borrowers were required to keep 100% of their capital at the bank, meaning borrowers also made up a large portion of depositors at the bank[25]. The collapse left borrowers in a predicament, firstly because those concerned over their deposits risked breaching the terms of their loans if they withdrew funds, and secondly because they were unsure if debts should continue to be serviced in light of the situation[26][27]. In response to the situation the FDIC relaxed deposit requirements while continuing to extend credit allowing client to diversify their funds without breaching contract[25]. When First Citizen Bank acquired SVB they acquired all outstanding loans, allowing clients to maintain their credit facilities[28].

Employees

At the end of 2022, SVB had a workforce of over 8,000, all of which were impacted to varying degrees by the bank’s failure[29]. Following the collapse employees were primarily concerned over the impact on their current employment and future career, as well as losses to their investment in the company. After the FDIC assumed control over the bank, the executives were fired and remaining employees were offered 45 days of continued employment at one and a half times their normal pay[29][30]. Before this agreement expired First Citizen bank agreed to acquire SVB from the FDIC allowing most employees to continue working under new ownership[28]. However, the following May, First Citizen announced its decision to lay off nearly 500 employees of SVB[31]. Despite SVB's failed reputation, in April 2023, HSBC hired 45 former SVB employees intending to launch a tech-venture capital banking practice. First Citizen Bank Sued over this matter the following may claiming HSBC had illegally poached the employees[32].

Employees of SVB were especially impacted when the bank failed and the share price collapsed[33]. According to former staff, some employees were receiving up to half of their annual salary in the form of shares in the company. The bank also had an attractive employee stock-purchasing plan allowing staff to purchase a portion of shares at a discounted rate. One former employee reported having lost in excess of $1 million after the crash[34]. There are likely countless others who suffered in a similar way.

Shareholders

SVB's stock price starting in 2006

On March 9, 2022 SVB's stock dropped 60% from the previous days opening price of $267.83, resulting in a $80 Billion dollar loss in total value of the shares[35][36]. The following day as federal regulators took over the bank, trading of SVB's shares was halted, wiping out all remaining value of the stock[37][38]. Although SIVB had been trending downwards for the prior 12 months, this rapid sequence of events left many shareholders without the opportunity sell their investments in the company. SVB's largest shareholders were investment groups and pension funds, extending the damage from the collapse to the clients of these companies[39]. Executives and employees of the Bank also held a significant share of the company due to the compensation and discounted purchasing programs. While top executives were able to sell large amounts of shares prior to the collapse, many employees were left holding the bag in early March 2023[34][40].

5 Largest Shareholders Q4 2022[39]
Shareholder Holdings
The Vanguard Group Inc. 6.66 Million Shares
BlackRock Fund Advisors 4.76 Million Shares
State Street Global Advisors Funds Management Inc. 3.08 Million Shares
Alecta Pension Insurance Mutual 2.63 Million Shares
JP Morgan 2.51 Million Share
SVB Executive Shareholders[40]
Shareholder Last Reported Holdings Prior to Collapse
Greg Becker, CEO 92,552 Shares
Michael Ducheneaux, President 25,489 Shares
Joan Parsons, Head of Specialty Commercial Banking 23,617 Shares
John China, SVB Capital President 22,580 Shares
Marc Cadieux, Chief Credit Officer 15,274 Shares

US Government/FDIC

The Federal Deposit Insurance Corporation (FDIC) office in Arlington, VA.
The Federal Deposit Insurance Corporation (FDIC) office in Arlington, VA.

The Primary concern of the US Government and by extension the FDIC was to contain the failure to as few financial institutions as possible and repair the damages that had been done in a fair manner. Failing to do this would pose massive risk to both the economy as a whole and the government political reputation. In order to prevent further damages to the banking system the FDIC took control of SVB immediately following the collapse[38]. Recognizing that trust in the banking system may fail if SVB's depositors were not made whole, the FDIC resolved to guarantee all the funds of SVB's clients. This however, was costly as the FDIC only insures deposits up to $250,000[41]. The FDIC committed to not using taxpayer funding for the $16.3 Billion required to cover the uninsured deposits. Instead, to recover losses to the Deposit Insurance Fund the FDIC introduced a special assessment requiring payment from US banking organizations that held over $5 billion in assets [42].

The US Federal Reserve also took measures to shore up liquidity in the banking system with the introduction of the Bank Term Funding Program. The program extended loans to U.S. depository institutions pledging assets valued at par, allowing banks to meet liquidity requirements without selling assets at a loss[43].

Banking Industry

The failure of a single bank can send ripples throughout the entire industry due to its interconnected nature. SVB's collapse sparked widespread panic amongst those who had large uninsured deposits, contributing to the failure of several other banks. Signature Bank was a commercial bank based out of New York known for being one of the first to accept Cryptocurrency deposits. Similarly to SVB signature had a large amount of uninsured deposits leading up to its collapse[44]. On March 12, two days after SVB was shutdown, Signature Bank was closed by regulators following a run on the banks deposits[45][46]. First Republic Bank, based in San Francisco, was also closed on May 1, 2023 following massive withdrawals of deposits after SVB was shut down[47][48]. First Republic Bank, which had a high level of uninsured deposits, became the second largest bank failure in US history[49].

Current Status and Lawsuits

Chandra Vanipenta v. SVB Financial Group et al

  • On March 13th, a class action lawsuit has been filed against SVB Financial Group, CEO Greg Becker, and CFO Daniel Beck in the U.S. District Court for the Northern District of California. [50]
  • The lawsuit addresses allegations of inadequate disclosure regarding the risks of future interest rate increases on the company's operations. The period under consideration spans from June 16, 2021, to March 10, 2023. [50]
  • Plaintiffs, led by shareholder Chandra Vanipenta, allege that the company's financial reports for 2020 through 2022 failed to fully account for Federal Reserve warnings about interest rate hikes, significantly understating the risk to the company's financial stability. [50]
  • The lawsuit seeks unspecified damages for investors affected by the alleged omissions, focusing on the company’s vulnerability to a bank run if its investments were negatively impacted by rising interest rates.[50]

Snook v. SVB Financial Group et al

  • On March 15th, an identical class action lawsuit has been filed against SVB Financial Group, CEO Greg Becker, and CFO Daniel Beck in the U.S. District Court for the Northern District of California. [51]
  • This lawsuit shares the same class period and allegations as Chandra Vanipenta v. SVB Financial Group et al and have been consolidated such that Chandra Vanipenta v. SVB Financial Group et al is now the lead case [52] [53]

City of Hialeah Employees Retirement System et al v. Becker et al

  • On April 7th, a class action lawsuit has been initiated on behalf of individuals and entities who acquired Silicon Valley Bank Financial Group's common stock between January 21, 2021, and March 10, 2023. [54]
    • As well as those who purchased or acquired SVB securities during offerings on specific dates in 2021 and 2022. [54]
  • Alleging violations of the Exchange Act of 1934 and the Securities Act of 1933, the lawsuit targets senior executives, board members, underwriters of public offerings, and the auditing firm KPMG, LLP as defendants. [54]

International Union of Operating Engineers Local 132 Pension Fund v. SVB Financial Group et al

  • On April 24th, a fourth class action lawsuit had been initiated further extending the class period to include dealings with SVB from November 5th, 2020 to March 10th, 2023. [55] [56]
  • As of March 27th, 2024 the class action lawsuits against SVB Financial Group and its executives are currently active and unresolved. [56]

From extensive research most current case proceedings are locked behind a paywall or require a request form submission and approval

Post Collapse

Current Ownership and Management

First Citizens Bank Office

After the collapse of Silicon Valley Bank (SVB), the third-largest bank failure in the history of the United States, the tech-focused bank wants people to know that they're back[57].

  • First Citizens Bank announced on March 27th, 2023, that they had agreed with the Federal Deposit Insurance Corporation (FDIC) to purchase all of the assets and liabilities of Silicon Valley Bank. The transaction is structured as a whole bank purchase and includes the assumption agreement with the loss share coverage[58].
  • “First Citizens Bank has proven to be one such steady partner. First Citizens is well known in many markets yet was new to the innovation economy[59].
  • Leadership recognized SVB’s unique and critical role in the innovation economy, and their actions to date demonstrate commitment to maintaining all that historically made SVB a preferred partner. Now, SVB is additive to First Citizens’ solid performance[59].
  • First Citizens’ leadership team is an extremely thoughtful group that is focused on the long-term, conservative in their management style and open to well-managed, strategic risk-taking” [59].

SVB maintains their name, however, it now operates as a division of First Citizens Bank

  • First Citizens Bank has upheld stability over its established 125-year history and holds diversified deposits and a robust balance sheet [60].
  • SVB openly amidst that they have lost the confidence of their clients, for which they are apologetic. Under the leadership of First Citizens Bank, they aim to earn bank their client's trust by promoting comprehensive products & services, knowledgeable teams, and innovation[60].

Rebuilding Efforts and Market Perceptions

  • “SVB’s Tech and Healthcare Banking team made more than 500 new loans totalling more than $3 billion in new loan commitments between April - December 2023” [59].
  • This is not the normal volume that SVB trades, they have managed to regain some clients and a foothold in the market. Furthermore, 81% of pre-March 2023 clients continue to have an account at SVB, and thousands of clients who have left have also returned [57].
  • The company is regrowing, as they have added roughly 200 employees since May 1st, 2023 adding to their total bench of more than 1,500 employees.
    • SVB has made significant efforts to rebuild and reposition itself since its existential challenges of 2023, they have maintained business continuity and are regaining momentum in the market. However, it can be said that SVB’s progress has been a sort of inevitability since March of 2023 because of the need for a lender for start-ups and tech firms [59].  
  • Users of SVB began to recognize that there were no other similar lenders in the market, the products and services hadn’t necessarily been lost and there was a recognition that there was no better place from which to serve the innovation economy [59].
  • “SVB’s entire business – from solutions and technology to our credit policy and beyond – was purpose-built for investors and innovation economy clients. Our clients in every sector and life stage need customized and comprehensive banking solutions, dedicated teams of sector experts with essential insights, and exceptional service delivered at the speed our clients require” [59].
    • This was no easy feat, Marc Cadieux - SVB’s President - said “The last year has been a lot about trying to correct what I think is a false narrative that SVB went away, that SVB left a void” [57].
    • As they are still doing the same things that made them successful before, not everyone is convinced.
    • Cadieux admits that “the days of being the exclusive banker to thousands of tech executives and their companies is over. “Everyone has two banks now,” he said” [57].
  • Before the bank run, SVB possessed nearly $119 billion in customer deposits, but by the end of 2023, that number dwindled to $38.5 billion [57].
  • Despite challenges, SVB remains a premier lender for tech start-ups as they adapt to shifts in the industry while correcting misconceptions about their continued operations.

Affected Companies

Company Impact on Holdings
Roku The streaming devices manufacturers state that  it has about $487 million, or 26% of its cash and cash equivalents, held in deposits with SVB[61].
Roblox Roblox states they had $150 million held at SVB. Assures they will not be affected by the latter's collapse this week[62].
Sunlight Financial Holdings The solar financing provider said the vast majority of unrestricted cash ($64 million out of $73.2 million) is deposited at SVB[61].
Acuityad Holdings INC The Canadian tech firm says it held American bank accounts with SVB which totalled $55 million in deposits[61].
Buzzfeed The digital media firm said it had about $56 million in cash and cash equivalents at the end of 2022, majority of which was held at SVB[61].
Astra Space INC The rocket maker says its cash is held on deposit with SVB, with the amount representing about 15% of the company's current cash, cash equivalents and marketable securities, as of March 10[61].
COHU The semiconductor products maker says it has deposit accounts with SVB with an aggregate balance of about $12.3 million, which is around 3.8% of the company's total cash and investments[61].
Rocket Lab USA INC The rocket maker says it had deposit accounts with SVB with an aggregate balance of about $38 million, or roughly 7.9% of the company's total cash and cash equivalents and marketable securities as of Dec. 31[61].
Alkami Technology The digital banking solutions provider says it had deposit accounts with SVB with an aggregate balance of about $3.3 million, along with around $8.3 million in "sweep" accounts used by SVB to purchase external assets[61].
Stitch Fix The online styling service firm says it anticipates that its $40 million credit line with SVB will not be available due to the bank's collapse[61].
Circle U.S. cryptocurrency firm Circle says $3.3 billion of its $40 billion of USD Coin reserves are at SVB[61].
BLOCKFI Bankrupt crypto lender BlockFi Inc has roughly $227 million in unprotected funds at SVB, the Wall Street Journal reported on Friday[61].
Payoneer Global The global payments provider says out of its roughly $6.4 billion in total cash balances as of Dec. 31, less than $20 million was held at SVB[61].
Lendingclub CORP The financial firm, which had $8 billion of total assets as of Feb. 28, says its relationship with SVB is limited to funds on deposit of $21 million, adding it does not pose a risk to the company's ongoing operations[61].
VIR Biotechnology The biotech firm says it maintains operating accounts at SVB with about $220 million as of Friday[61].
Sunrun Residential solar company Sunrun Inc says it has cash deposits with SVB totaling nearly $80 million, while SVB's undrawn commitment in the non-recourse senior aggregation warehouse facility is about $40 million[61].
Sunnova Energy International INC Sunnova's subsidiary is part of a credit facility where SVB serves as a lender, with unfunded commitments of $15 million under a Back-Leverage Facility[61].
Oak Street Health INC The healthcare firm says SVB is lender for $300 million term loan credit facility along with Hercules Capital Inc, of which company has drawn $75 million[61].
Ginkgo Bioworks Holdings INC The drug developer says cash balance of its subsidiary Zymergen Inc is held in deposit accounts at SVB, representing about $74 million of the company's cash and cash equivalents as of Dec. 31[61].
Alphatec Holdings INC The medical technology firm says it maintained deposit accounts with SVB of about $14 million that are used for its day-to-day operations[61].
Europe The medical technology firm says it maintained deposit accounts with SVB of about $14 million that are used for its day-to-day operations[61].
Trustpilot Group PLC The Danish firm, which runs a global review platform, says SVB UK was its principal banking partner, with $36 million held in the bank and $18 million is currently in transfer out of SVB UK but pending confirmation[61].
Diaceutics The technology and solutions provider to the pharma industry warns of material uncertainty over its ability to service its working capital in the short term. It had most of its 22.2 million pounds in cash in SVB accounts and tried to move its cash before SVB's closure but the transaction is pending[61].
Zealand Pharm The Danish drug developer has deposits totalling 162.6 million Danish crowns ($23.4 million) at SVB, which was about 15% of the group's liquid funds[61].
Pharming Group NV The biopharmaceutical company says it has $26 million of deposits at SVB U.S., and expects to not bear any losses on these deposits[61].
Kinnevik AB The Sweden-based investment firm says its pro rata share of SVB deposits amounts to less than $20 million[61].
Alecta The Swedish pension fund, an SVB shareholder since 2019, has around 1,200 billion Swedish crowns ($111.94 billion) in assets under management and says its total investment in SVB was just under 9 billion crowns[61].
Asian-Pacific Nitro Software Australia's productivity software maker Nitro Software Ltd said it had about $12.18 million of its global cash reserves held on deposit at SVB[61].

The Treasury Department, Federal Reserve, and the FDIC announced they would guarantee the accounts at SVB and ensure access to funds the next day[63].

  • Although this is not a complete comprehensive list, this illustrates how much money some institutions held within SVB, and the financial ruin that could have occurred if the Feds and FDIC did not guarantee the uninsured accounts.

Where are the Key Players Now?

Greg Becker

  • Initially, after the collapse, Greg Becker refused to give up his $10 million payout. Arguing that unprecedented events (interest rate hikes and negative social media coverage) lead to the collapse rather than mismanagement[64].
  • Following the failure of SVB, Becker remained on the board and practiced as the CEO until April 19th, 2023 when he resigned from both roles[65].
  • Becker remains involved with SVB, acting as a consultant “on an as-needed basis at no cost to the company” [66].

Daniel Beck

  • Daniel Beck resigned the week following the collapse of SVB [66].
  • He is now the founder and practicing at Finley Road Consulting [67].

Board of Directors

  • In a report dated April 28, 2023, the Federal Reserve attributed blame for the bank's failure to SVB’s senior management for mismanaging investment risk and their balance sheet.
  • The Board of Directors was disbanded and effective July 24th, 2023 there was a new Board of Directors which have been appointed [68].

First Citizens Bank

  • The bank achieved a historic milestone with a total of $9.5 billion in profit in the second quarter of 2023, which is largely attributed to its acquisition of SVB[69].
  • Acquired through a ‘take-under’ deal, the bank acquired SVB at a discounted price. The deal resulted in a significant increase in the bank’s equity and income statement, making it the highest quarterly profit in First Citizens Bank’s 125-year history[69].
  • First Citizens acquired SVB at a discount of $16.45 billion[69].
  • After $483 million in adjustments, the bank reduced the asset discount to $13.6 billion from $16.45 billion[69].
  • The bank booked a gain of $9.8 billion on the deal, after a $500 million payment to the FDIC[69].
  • SVB now operates as a division of First Citizens Bank [60].

Leerink Partners

  • "On July 5, a bankruptcy court judge in Manhattan approved Leerink’s plan to acquire control of what was known as SVB Securities in a $55 million management buyout, with the backing of Seth Klarman’s Boston-based hedge fund firm, Baupost Group"[70] who pledge 50 million[71]
    • The business will be called the Leerink Partners again[70].
    • SVB also gets a small equity stake as apart of the deal[70].
    • Leerink partners retained their workforce and key clients. Exemplifying that their is loyalty and confidence in the firm's leadership and outlining their importance in the regional economy of Boston[71].
    • The deal allows the Leerink Partners to keep their original name, maintaining legacy and autonomy[71].

References

  1. ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 1.25 "Review of the Federal Reserve's Supervision and Regulation of Silicon Valley Bank - April 2023". Federal Reserve. Retrieved March 22, 2024.
  2. ↑ "SVB Financial Group (SIVB)". Yahoo Finance. March 20, 2024. Retrieved March 20, 2024.
  3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 Diaz, Jaclyn (March 15, 2023). "For 40 years, Silicon Valley Bank was a tech industry icon. It collapsed in just days". MPR News. Retrieved March 6, 2024.
  4. ↑ "Silicon Valley Bank is now a division of First Citizens Bank". First Citizens Bank. Retrieved March 21, 2024.
  5. ↑ "Silicon Valley Bank". Banks Daily. March 21, 2024. Retrieved March 21, 2024.
  6. ↑ 6.0 6.1 "The financial partner of the innovation economy". Silicon Valley Bank. 2024. Retrieved March 8, 2023.
  7. ↑ Ovide, Shira (April 20, 2021). "How Big Tech Won the Pandemic". The New York Times. Retrieved March 23, 2024.
  8. ↑ 8.00 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08 8.09 8.10 8.11 8.12 8.13 8.14 8.15 Zahn, Max (March 14, 2023). "A timeline of the Silicon Valley Bank Collapse". ABC News. Retrieved March 20, 2024.
  9. ↑ 9.0 9.1 "Federal Funds Rate - 62 Year Historical Chart". Macro Trends. Retrieved March 23, 2024.
  10. ↑ Rugaber, Christopher (March 13, 2023). "After two historic US bank failures, here's what comes next". AP News. Retrieved March 23, 2024.
  11. ↑ Saul, Derek (May 1, 2023). "First Republic Bank Failure: A Timeline Of What Led To The Second-Largest Bank Collapse In U.S. History". Forbes. Retrieved March 24, 204. Check date values in: |access-date= (help)
  12. ↑ 12.0 12.1 12.2 Meyer, Keith (04/05/2023). "Silicon Valley Bank Collapse: Lessons for Boards". Major, Lindsay & Africa. Retrieved 03/24/2024. Check date values in: |access-date=, |date= (help)
  13. ↑ 13.0 13.1 Griffith, Erin; Copeland, Rob (03/09/2023). "Silicon Valley Bank's Financial Stability Worries Investors". The New York Times. Retrieved 03/24/2024. Check date values in: |access-date=, |date= (help)
  14. ↑ Dixit, Pranav (03/11/2023). "Silicon Valley Bank crisis: The rise and fall of CEO Greg Becker". Business Today. Retrieved 03/24/2024. Check date values in: |access-date=, |date= (help)
  15. ↑ 15.0 15.1 15.2 15.3 15.4 Gilbert, Daniel; Frankel, Todd; Menn, Joseph (03/02/2023). "Silicon Valley Bank's risk model flashed red. So its executives changed it". The Washington Post. Retrieved 03/24/2024. Check date values in: |access-date=, |date= (help)
  16. ↑ 16.0 16.1 16.2 16.3 "2023 Proxy Statement: Notice of 2023 Annual Meeting of Stockholders" (PDF). Silicon Valley Bank. 04/27/2023. Retrieved 03/23/2024. Check date values in: |access-date=, |date= (help)
  17. ↑ Johnson, Katanga; Rosenblatt, Joel; Dolmetsch, Chris (03/14/2023). "SVB's Lack of Risk Officer Emerges as Focus in Fed Probe". Bloomberg. Retrieved 03/23/2024. Check date values in: |access-date=, |date= (help)
  18. ↑ Rossi, Clifford (03/14/2023). "Silicon Valley Bank: A Failure in Risk Management". Global Association of Risk Professionals. Retrieved 03/23/2024. Check date values in: |access-date=, |date= (help)
  19. ↑ Gompers, Paul (03/17/2023). "Silicon Valley Bank's Focus on Startups Was a Double-Edged Sword". Harvard Business Review. Retrieved 03/23/2024. Check date values in: |access-date=, |date= (help)
  20. ↑ Smialek, Jeanna (03/19/2023). "Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems". The New York Times. Retrieved 03/23/2024. Check date values in: |access-date=, |date= (help)
  21. ↑ Barr, Michael (April 28, 2023). "Review of the Federal Reserve's Supervision and Regulation of Silicon Valley Bank" (PDF). Federal Reserve. line feed character in |title= at position 77 (help)
  22. ↑ "Your Insured Deposits". FDIC. August 30, 2023.
  23. ↑ "FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California". FDIC. March 12, 2023.
  24. ↑ Sullivan, Becky; Gura, David (March 14, 2023). "What to know about the Silicon Valley Bank collapse, takeover and fallout". npr.
  25. ↑ 25.0 25.1 Temkin, Marina (march 16, 2023). "Some SVB borrowers get the best of both worlds following bank's collapse". PitchBook. Check date values in: |date= (help)
  26. ↑ Seligson, Paula; Anand, Priya; Rocha, Priscilla (March 15, 2023). "SVB Clients at Risk of Default May Have No Choice But to Return". Bloomberg.
  27. ↑ "How Does The Failure of Silicon Valley Bank Affect Stakeholders". Retrieved March 20, 2024.
  28. ↑ 28.0 28.1 Hirsch, Lauren (March 27, 2023). "Silicon Valley Bank Sold to First Citizens in Government-Backed Deal". The New York Times.
  29. ↑ 29.0 29.1 Nguyen, Lannah; Schroeder, Pete (March 11, 2023). "SVB staff offered 45 days of work at 1.5 times pay". Rueters.
  30. ↑ Lowery, Annie (March 16, 2023). "You Should Be Outraged About Silicon Valley Bank". The Atlantic.
  31. ↑ Troung, Kevin (May 25, 2023). "Silicon Valley Bank layoffs spark anger, confusion among former employees". The San Francisco Standard.
  32. ↑ Wiessner, Daniel (May 22, 2023). "First Citizens sues HSBC for hiring away Silicon Valley Bank staff". Reuters.
  33. ↑ Micaletti, Raymond (April 4, 2023). "The SVB Financial Collapse: How It Unfolded & What We See Ahead". allio.
  34. ↑ 34.0 34.1 Pringle, Eleanor (March 27, 2023). "SVB staff claim they got up to 50% of their salaries in company equity—now some may have have lost millions in its collapse". Fortune.
  35. ↑ Hu, Krystal; Tong, Anna; Rajesh, Ananya. "Silicon Valley Bank scrambles to reassure clients after 60% stock wipe-out". Reuters.
  36. ↑ "Stock Performance". SVB.
  37. ↑ "NASDAQ HALTS SVB FINANCIAL GROUP". NASDAQ.
  38. ↑ 38.0 38.1 "SILICON VALLEY BANK; ORDER TAKING POSSESSION OF PROPERTY AND BUSINESS" (PDF). DFPI. line feed character in |title= at position 48 (help)
  39. ↑ 39.0 39.1 O'Brient, Samuel (Mar 10, 2023). "5 Investors That Are Betting Big on Silicon Valley Bank (SIVB) Stock". InvestorPlace.
  40. ↑ 40.0 40.1 Truong, Kevin (March 13, 2024). "How much Silicon Valley Bank executives, investors lost in epic meltdown". The San Francisco Standard.
  41. ↑ Cox, Jeff (March 12, 2023). "U.S. government steps in and says people with funds deposited at SVB will be able to access their money". CNBC.
  42. ↑ "Final Rule on Special Assessment Pursuant to Systemic Risk Determination". FDIC. November 16, 2023.
  43. ↑ "Bank Term Funding Program" (PDF). Federal Reserve. January 24, 2024.
  44. ↑ Mueller, Julia; Lane, Sylvan (March 13, 2023). "Five things to know about Signature Bank". The Hill.
  45. ↑ "FDIC Establishes Signature Bridge Bank, N.A., as Successor to Signature Bank, New York, NY". FDIC. March 12, 2023.
  46. ↑ "Signature Bank failed because of 'poor management,' FDIC report finds". CNN. April 28, 2023.
  47. ↑ "First Republic Bank deposits tumble more than $100 billion as it explores options". Reuters. April 25, 2023.
  48. ↑ "JPMorgan Chase Bank, National Association, Columbus, Ohio Assumes All the Deposits of First Republic Bank, San Francisco, California". FDIC. May 1, 2023.
  49. ↑ Sweet, Ken (May 1, 2023). "First Republic Bank seized, sold to JPMorgan Chase in 2nd-biggest failure in U.S. history". PBS.
  50. ↑ 50.0 50.1 50.2 50.3 "Class action lawsuit filed against Silicon Valley Bank parent company". PBS News Hour. March 14, 2023. Retrieved March 2, 2024.
  51. ↑ "Snook v. SVB Financial Group et al". Justia Dockets and Filings. Retrieved March 15, 2024.
  52. ↑ "Snook v. SVB Financial Group et al". Pacer Monitor. Retrieved March 20, 2024.
  53. ↑ "Chandra Vanipenta v. SVB Financial Group et al". Pace Monitor. Retrieved March 25, 2024.
  54. ↑ 54.0 54.1 54.2 "City of Hialeah Employees Retirement System et al v. Becker et al". UniCourt. Retrieved March 22, 2024.
  55. ↑ "International Union of Operating Engineers Local 132 Pension Fund v. SVB Financial Group et al". Pacer Monitor. Retrieved March 23, 2024.
  56. ↑ 56.0 56.1 "Grant & Eisenhofer Files Class Action Lawsuit Against SVB Financial Group on Behalf of Institutional Investor, Extending Class Period of Previously Filed Actions". Business Wire. Retrieved March 26, 2024.
  57. ↑ 57.0 57.1 57.2 57.3 57.4 De Vynck, Gerrit (03/14/2024). "A year after imploding, Silicon Valley Bank tries to make a comeback". The Washington Post. Check date values in: |date= (help)
  58. ↑ "Silicon Valley Bank is now a division of First Citizens Bank".
  59. ↑ 59.0 59.1 59.2 59.3 59.4 59.5 59.6 "Company News - What a Difference a Year Makes".
  60. ↑ 60.0 60.1 60.2 "SVB - Fully Committed to the Innovation Economy".
  61. ↑ 61.00 61.01 61.02 61.03 61.04 61.05 61.06 61.07 61.08 61.09 61.10 61.11 61.12 61.13 61.14 61.15 61.16 61.17 61.18 61.19 61.20 61.21 61.22 61.23 61.24 61.25 61.26 "Which companies are affected by Silicon Valley Bank collapse?".
  62. ↑ "Roblox had $150m in Silicon Valley Bank, says it will be unaffected by collapse".
  63. ↑ "A bailout or not? Did the federal government bailout Silicon Valley Bank and Signature Bank?".
  64. ↑ "Top CEO blunders of the year, from the cringe-worthy to downright bizarre".
  65. ↑ "Gregory W. Becker".
  66. ↑ 66.0 66.1 "The CEO and CFO of Silicon Valley Bank's bankrupt former owner have resigned more than a month after its stunning collapse".
  67. ↑ "Dan Beck - Linkedin".
  68. ↑ "SVB Financial Group Announces Board Appointments".
  69. ↑ 69.0 69.1 69.2 69.3 69.4 "'Take-under' deal for Silicon Valley Bank fuels $9.5 billion profit for First Citizens Bancshares".
  70. ↑ 70.0 70.1 70.2 Chesto, Jon (07/17/2023). "How Boston's biggest investment bank was reborn after SVB collapsed". The Boston Globe. Check date values in: |date= (help)
  71. ↑ 71.0 71.1 71.2 Faille, Christopher (07/10/2023). "SVB state spins off former Leerink Partners as... Leerink Partners". Private Debt Investor. Check date values in: |date= (help)
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