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	M33�!bac35339f0ebee7bfbaa68f2e0d0708e2023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bank shut down by US banking regulators\nTech-focused lender failed in eleventh-hour attempt to raise new capital after facing $42bn in deposit outflows\n\nWith about $209bn in assets, SVB has become the second-largest bank failure in US history \u00a9 David Paul Morris/Bloomberg\nSilicon Valley Bank was shuttered by US regulators on Friday after customers raced to withdraw $42bn \u2014 a quarter of its total deposits \u2014 in one day and a failed effort to raise new capital called into question the future of the tech-focused lender.\n\nWith about $209bn in assets, SVB has become the second-largest bank failure in US history, after the 2008 collapse of Washington Mutual, and marks a swift fall from grace for a lender that was valued at more than $44bn less than 18 months ago.\n\nThe Federal Deposit Insurance Corporation, the US regulator that guarantees bank deposits of up to $250,000, said it was closing SVB and that insured depositors would have access to their funds by Monday.\n\nIt came after a run on the California-based bank on Thursday, during which SVB\u2019s deposit holders initiated withdrawals that ultimately totalled $42bn, in some cases after encouragement from their venture capital backers.\n\nThe scale of the withdrawals was revealed in a possession order by a California financial regulation agency on Friday, which said the bank was insolvent and its liquidity position was inadequate. It also said that SVB had a \u201cnegative cash balance\u201d of around $958mn.\n\nMany of SVB\u2019s clients were venture capital funds as well as tech and healthcare start-ups, and would have account balances well in excess of the maximum amount insured by the FDIC. The regulator said these depositors would receive an initial payment next week and the rest would depend on what happens to SVB\u2019s assets.\n\nRecommended\n\nBanks\nCalifornia bank failure shakes global financial stocks\n\nThe regulator historically has sought to merge failed lenders with a larger and more stable institution. Washington Mutual, for example, was sold to JPMorgan Chase. The FDIC said it would use the sale proceeds of SVB to fund payouts to larger depositors.\n\nMore than a dozen leading venture capital firms \u2014 including Khosla Ventures, Accel, Greylock Partners, General Catalyst and Ribbit Capital, which collectively back many start-ups in SVB\u2019s customer base \u2014 said in a statement Friday they would stand behind\u00a0the bank if it were \u201cpurchased and appropriately capitalised\u201d. Absent from that list were Sequoia and Andreessen Horowitz, two of the largest and most influential firms in Silicon Valley.\n\nAt the end of 2022, SVB estimated that almost 96 per cent of its $173.1bn in deposits exceeded or were not covered by FDIC insurance. By comparison, Bank of America has estimated that around 38 per cent of its $1.9tn in deposits were not covered by FDIC insurance.\n\nThe prices on SVB\u2019s bonds plunged on Friday, with its senior debt trading at about 45 cents on the dollar and its junior debt as low as 12.5 cents, suggesting bondholders are braced for heavy losses.\n\n"textdocument33

TT�)	M33�%99ee909a2f2186ded9872bb8e1d804ab2023-03-22 14:27:492023-03-22 14:27:49"Earlier on Friday, SVB had abandoned its efforts to raise $2.25bn in new funding to cover losses on its bond portfolio and had begun looking for a buyer to save it, according to people with knowledge of the efforts.\n\nSVB shares were halted during early trading on New York\u2019s Nasdaq exchange, and its woes hit shares in several other US banks that are seen to have similar depositor and funding profiles.\n\nTrading in PacWest, Western Alliance and First Republic was stopped because of the volatility after they all initially fell 40 to 50 per cent. Trading was also briefly stopped in Signature Bank after its shares fell nearly 30 per cent. Several of those banks sought to reassure the market by putting out statements highlighting their differences from SVB in terms of asset and depositor base.\n\nThe banking group\u2019s troubles stem from a decision made at the peak of the tech boom to park $91bn of its deposits in long-dated securities such as mortgage bonds and US Treasuries, which were deemed safe but are now worth $15bn less than when SVB purchased them after the Federal Reserve aggressively raised interest rates.\n\nIt had planned to sell $1.25bn of its common stock to investors and an additional $500mn of mandatory convertible preferred shares, which are slightly less dilutive to existing shareholders. That would have helped bridge the roughly $1.8bn in losses SVB incurred from the sale of about $21bn of securities initiated to cover customers withdrawing deposits.\n\nOn Thursday, SVB and its underwriter Goldman Sachs raced to complete the share offering. While Goldman had secured enough interest in the convertible bond deal by mid-afternoon, the common stock sale was struggling as SVB shares slid, said one person with knowledge of the efforts. Private equity firm General Atlantic had also committed to provide $500mn in equity if the offering had been completed.\n\nThe bank\u2019s shares registered their biggest-ever decline on Thursday, wiping $9.6bn off its market capitalisation. SVB shares had fallen more than 60 per cent in pre-market trading on Friday before the trading halt.\n\nUS bank failures have been extremely rare in recent years; the last FDIC insured bank to close was in October 2020, and the last time there were more than 10 was 2014.\n\nIn a statement on Friday, the US Treasury department said secretary Janet Yellen had met with top officials from the Federal Reserve, FDIC and the Office of the Comptroller of the Currency, which also oversees banks, to discuss the SVB fallout.\n\n\u201cSecretary Yellen expressed full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains\u00a0resilient\u00a0and regulators have effective tools to address this type of event,\u201d the statement said.\n\nCecilia Rouse, the outgoing chair of the White House Council of Economic Advisers, also tried to send a reassuring message, saying: \u201cOur banking system is in a fundamentally different place than it was\u2009.\u2009.\u2009.\u2009a decade ago.\u201d\n\nRecommended\n\nLexSilicon Valley Bank\nUS banks: funding pressure, yes. "textdocument25

93�94��T	M33�{ac901a0685d977627d4d59d89b58677a2023-03-22 14:27:492023-03-22 14:27:49"Liquidity crunch, no. Premium\u00a0content\n\nSVB\u2019s collapse came two days after Silvergate, a San Diego-based bank that catered to the crypto industry, said it would voluntary wind down after customers withdrew billions of dollars.\n\nThe Bank of England has also moved to put the UK arm of Silicon Valley Bank into resolution after it applied for \u00a31.8bn of liquidity. Officials there have begun conversations with professional services firms on overseeing the resolution process.\n\nThe ramifications of SVB\u2019s troubles may be widely felt. The lender is the banking partner for half of US venture-backed tech and life sciences companies, and is a large presence in offering credit lines to the $10tn private capital industry.\n\nIts customers had begun to grow increasingly fearful of the bank\u2019s financial position on Thursday, when some start-ups began pulling their cash. Some venture capital groups acknowledged that they had begun advising some of their portfolio companies to consider withdrawing a portion of their deposits from the lender earlier this week.\n\n\u201cSVB\u2019s 40 years of business relationships supporting Silicon Valley evaporated in 14 hours,\u201d said a senior executive at one multibillion-dollar venture capital fund."textdocument29

���:	M33�G54499ec37b4b62b7258a0d20ed8d20212023-03-22 14:27:492023-03-22 14:27:49"Collapse of Silicon Valley Bank\nOn March 10, 2023, Silicon Valley Bank (SVB) failed after a bank run, marking the second-largest bank failure in United States history and the largest since the 2007\u20132008 financial crisis. It was one of three March 2023 United States bank failures.\n\nSeeking higher investment returns, in 2021 SVB began shifting its marketable securities portfolio from short-term to long-term Treasury bonds. The market value of these bonds decreased significantly through 2022 and into 2023 as the Federal Reserve raised interest rates to curb an inflation surge, causing unrealized losses on the portfolio. Higher interest rates also raised borrowing costs throughout the economy and some Silicon Valley Bank clients started pulling money out to meet their liquidity needs. To raise cash to pay withdrawals by its depositors, SVB announced on March 8 that it had sold over US$21 billion worth of securities, borrowed $15 billion, and would hold an emergency sale of some of its treasury stock to raise $2.25 billion. The announcement, coupled with warnings from prominent Silicon Valley investors, caused a bank run as customers withdrew funds totaling $42 billion by the following day.\n\nOn the morning of March 10, 2023, the California Department of Financial Protection and Innovation seized SVB and placed it under the receivership of the Federal Deposit Insurance Corporation (FDIC). About 89 percent of the bank's $172 billion in deposit liabilities exceeded the maximum insured by the FDIC. Two days after the failure, the FDIC received exceptional authority from the Treasury and announced jointly with other agencies that all depositors would have full access to their funds the next morning. Seeking to auction off all or parts of the bank, the FDIC reopened it on March 13 as a newly organized bridge bank, Silicon Valley Bridge Bank, N.A. Although some characterized the government response as a bailout, the plan did not entail rescuing the bank, its management or shareholders, but rather making uninsured depositors whole from the proceeds of selling the bank's assets, without the use of taxpayer money.\n\nThe collapse of SVB had significant consequences for startup companies in the U.S. and abroad, with many briefly unable to withdraw money from the bank. Other large technology companies, media companies, and wineries were also affected. For a number of founders and their venture capital backers, this was the bank of choice. Its stock price roughly tripled from 2018 to 2021.[citation needed]\n\nBackground\nMain article: Silicon Valley Bank\nSVB was a commercial bank founded in 1983 and headquartered in Santa Clara, California. At its collapse, SVB was the 16th largest bank in the U.S. and was heavily skewed toward serving companies and individuals from the technology industry. Nearly half of U.S. venture capital-backed healthcare and technology companies were financed by SVB. Companies such as Airbnb, Cisco, Fitbit, Pinterest, and Block, Inc. have been clients of the bank. "textdocument11

���[	K33�9c8031c6c7d2e0282f6c74dad6c8bf72023-03-22 14:27:492023-03-22 14:27:49"In addition to financing venture-backed companies, SVB was well known as a source of private banking, personal credit lines, and mortgages to tech entrepreneurs, and specialized lending money to higher-risk new companies. Silicon Valley Bank required an exclusive relationship of those borrowing from the bank. Prior to March 9, 2023, SVB was in \"sound financial condition\", according to the California Department of Financial Protection and Innovation, though an increased number of short sellers began to target SVB earlier in the year. Employees received their annual bonuses on March 10, 2023, hours before the government took control of the company.\n\nAs of the last call report of the bank, filed on December 31, 2022, it held $209 billion in total assets, with $175.5 billion in total deposits, of which the bank estimated $151.6 billion (86.4 percent) were uninsured.\n\nCollapse\nFor broader coverage of this topic, see March 2023 United States bank failures.\nLosses\nThe bank's deposits increased from $62 billion in March 2020 to $124 billion in March 2021, benefiting from the impact of the COVID-19 pandemic on science and technology. Most of these deposits were invested in long-term Treasury bonds as the bank sought a higher return on investment than was available on shorter-term bonds. These long-term bonds fell in current market value as interest rates rose during the 2021\u20132023 inflation surge and they became less attractive as investments relative to newer bond issues. In April 2022, SVB's chief risk officer stepped down, and a successor was not named until January 2023\u2014a period coinciding with the period of interest rate increases.\n\nAt the end of 2022, the bank had a $117 billion bond portfolio, divided into a $91.3 billion held-to-maturity portfolio (meaning it was not marked to market and profits or losses would not be realized until maturity) and a $26 billion available-for-sale portfolio (which as the name implies was marked to market). At that point in time, its marked-to-market unrealized losses for securities held to maturity exceeded $15 billion. The bank did not hedge against interest rate risk on that part of its bond portfolio, apparently for the same reason that most banks do not: the hedge itself would bounce around with the market, while the point of holding bonds to maturity is to hold them at par. Most banks minimize interest rate risk in their held-to-maturity portfolios by buying shorter-term bonds. The bank did hedge against interest rate risk on its available-for-sale portfolio by building up a portfolio of $15.2 billion of interest rate swaps by the end of 2021.\n\nAt the same time, startup companies withdrew deposits from the bank to fund their operations as private financing became harder to come by. A series of layoffs in the technology sector that began in 2022 also caused depositors to draw down their savings. During the first half of 2022, the bank realized $517 million in gains by unwinding $11 billion of its interest rate swaps on its available-for-sale bond portfolio. "textdocument27

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84bd98418957fe166d0d322b8789257e2023-03-22 14:27:492023-03-22 14:27:49"By the end of the year, it had only $563 million in swaps protecting that portfolio. In early 2023, to raise needed cash to fund withdrawals, the bank sold all of its available-for-sale securities, realizing a $1.8 billion loss. The bank was criticized for timing its announcement shortly after Silvergate Bank, which catered to cryptocurrency users, started winding down its operations, and for not lining up private funding ahead of the announcement.\n\nSome banking experts said that the bank would have managed its risks better had it not been for the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), enacted in 2018 and supported by SVB CEO Greg Becker, which reduced the frequency and number of scenarios of required stress testing implemented under the Dodd\u2013Frank Wall Street Reform and Consumer Protection Act for banks with under $250 billion in assets. The Federal Reserve Bank of San Francisco did have discretion to annually examine any bank with $100 billion in assets. In implementing the regulatory changes, Federal Reserve Vice Chair Randal Quarles also changed the Federal Reserve's bank supervisory culture, allegedly making routine supervision less intense and more predictable.\n\nInstability\n\nSVB Financial Group stock price\nA 2021 Federal Reserve review of the bank found several deficiencies in its risk management procedures. The bank failed to fix six citations issued by the Fed and was placed under a full supervisory review in July 2022. In the autumn, San Francisco Fed officials met with SVB senior leaders to discuss the bank's ability to raise cash in a crisis and possible exposure to losses as interest rates rose. Fed officials determined the bank was using flawed models that led SVB officers to incorrectly believe rising interest rates would increase the bank's interest revenue to substantially stabilize its financial condition. By early 2023, the Fed placed SVB in a \"horizontal review\" of its risk management procedures.\n\nIn the week before the collapse, Moody's Investors Service reportedly informed SVB Financial, the bank's holding company, that it was facing a potential double-downgrade of its credit rating because of its unrealized losses. On March 8, 2023, SVB announced it had sold over $21 billion worth of its investments, borrowed $15 billion, and would hold an emergency sale of its stock to raise $2.25 billion, including $500 million to General Atlantic. JPMorgan Chase and Bank of America turned down opportunities to acquire the bank. Despite the steps taken by the bank, Moody's downgraded SVB on March 8.\n\nInvestors at several venture capital firms, including executives at Peter Thiel's Founders Fund, Union Square Ventures and Coatue Management urged their portfolio companies to withdraw their deposits from the bank, with Founders Fund withrawing all of its funds from the bank by the morning of March 9. By the close of business that day, customers had withdrawn $42 billion, leaving the bank with a negative cash balance of about $958 million. Among the financial services companies receiving money from SVB customers were Brex, JPMorgan Chase, Morgan Stanley and First Republic Bank. "textdocument20

���l	K33�-6409f66501ffde5a9290f7d511877a92023-03-22 14:27:492023-03-22 14:27:49"The value of SVB's shares plummeted until a trading halt was implemented on the morning of March 10.\n\nOn February 27, SVB Financial Group CEO Greg Becker sold 12,451 shares of company stock, worth $3.6 million, through an executive trading plan that he filed with the SEC under Rule 10b5-1 on January 26. The rule has been criticized as a loophole allowing for insider trading. Beginning April 1, the SEC will require a minimum 90-day cooling period for most executive trading plans.\n\nReceivership\nThe logo of the Deposit Insurance National Bank of Santa Clara. Two horizontal lines are on the top and bottom of the logo. The letters 'DINB' are large, and 'of Santa Clara' are below it in a smaller font.\nThe FDIC temporarily created the Deposit Insurance National Bank of Santa Clara (DINB) to distribute insured deposits before replacing it with a bridge bank.\nOn the morning of March 10, examiners from the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) arrived at the offices of SVB to assess the company's finances. Several hours later, the California Department of Financial Protection and Innovation issued an order taking possession of SVB, citing inadequate liquidity and insolvency, and appointed the FDIC as receiver. The failure of SVB was the largest by assets of any bank since the financial crisis of 2007\u20132008 and the second-largest failure of an FDIC-insured bank.\n\nAccording to regulatory reports as of December 31, 2022, uninsured deposits were estimated to represent 89 percent of total deposits at the bank. With no other bank immediately offering to assume or guarantee them, the FDIC organized a Deposit Insurance National Bank of Santa Clara (DINB) to re-open the bank's branches the following Monday and enable access to insured deposits only. It announced that it would begin paying dividends for uninsured funds within the following week as SVB's assets were liquidated. Moody's Investor Service projected a recovery rate for uninsured depositors of 80\u201390 percent. The FDIC notified Silicon Valley Bank employees that they would be let go in 45 days' time; in the meantime, it offered salaried employees a 50% raise and hourly employees double pay for any overtime. The Federal Reserve Bank of San Francisco stated that the bank's CEO Greg Becker was no longer on its board of directors.\n\nThe simultaneous failures of SVB and New York's Signature Bank raised concern about the condition of other regional banks, with particular attention to First Republic Bank and Western Alliance. Faced with the possibility of a broader loss of confidence, on March 12 the Treasury granted the FDIC an exception allowing it to guarantee the uninsured deposits of both failed banks and to cover the expense through special assessments on other member banks. On March 13 the FDIC transferred SVB assets to a new bridge bank, Silicon Valley Bridge Bank, N.A., and appointed Tim Mayopoulos as CEO. The bridge bank consolidated insured and uninsured deposits into a single institution, making it more attractive to prospective buyers. "textdocument13

���X	M33�b3de3d3449215a88d1946d3f0dcec67a2023-03-22 14:27:492023-03-22 14:27:49"There is a dispute about whether the U.S. government's guarantee to insure depositors in full, rather than just the $250,000 per account protected by law, qualifies as a bailout. President Joe Biden denied the term bailout applies in this particular case. Treasury Secretary Janet Yellen had already ruled out bailing out SVB.\n\nSilicon Valley Bank's overseas subsidiaries held $13.9 billion in deposits. The Bank of England issued a statement that it sought a court order to place the United Kingdom subsidiary of the bank into a Bank Insolvency Procedure. Shanghai Pudong Development Bank issued a statement that its joint operations with SVB, chaired by its own Shanghai-based chairman, were not affected by the collapse as of March 11. HSBC UK announced on March 13 that it had agreed to acquire Silicon Valley Bank UK for \u00a31, at no cost to taxpayers and with depositors fully protected. Canadian regulator Office of the Superintendent of Financial Institutions (OSFI) temporarily seized control of SVB Canada on March 12. On March 15, OSFI took permanent control of the bank and announced it would restructure SVB Canada to a new bridge bank to be created by the FDIC, after the regulator was unable to find a buyer.\n\nAn initial auction of Silicon Valley Bank assets on March 12 attracted a single bid that was not from a bank, after PNC Financial Services and RBC Bank backed away from making offers. Bank of America, JPMorgan Chase, and Goldman Sachs all declined to make offers. The FDIC canceled the auction, scheduling a second to attract bids from major banks, now that the bank's systemic risk designation allows the FDIC to insure all deposits. First Citizens BancShares is reportedly considering a bid. The FDIC has decided to sell SVB Private (the former Boston Private) separately from Silicon Valley Bridge Bank. The bank's loan portfolio, which Moody's recently rated as conservative and high-performing, was not a factor in the collapse and is considered to be an attractive asset. Private equity firms including Apollo Global Management, Blackstone Inc., and Kohlberg Kravis Roberts are considering a purchase of the bank's loans. The FDIC has given traditional banks an advantage over private equity firms by limiting examinations of the bank's financials to institutions that hold a bank charter.\n\nIn the meantime, Mayopoulos urged venture capitalists and startups to keep their deposits in the bridge bank, apparently to improve the bank's financial condition. He suggested that customers return some of the deposits they had recently pulled out of the bank, as part of a diversification strategy. A group of venture capitalists called for depositors to keep at least half of their capital in the bank.\n\nSVB Financial Group began exploring a potential sale of the bank's sister companies SVB Capital and SVB Securities. The latter's founder, Jeffrey Leerink, has expressed interest in buying back the firm. However, the finances of these companies are deeply intertwined with Silicon Valley Bank, which could complicate any sale. "textdocument31

���s		M33�97f1205532ad9c2413d0ccf2c509c5aa22023-03-22 14:27:492023-03-22 14:27:49"The company filed Chapter 11 bankruptcy one week after the bank's failure. A group including Centerbridge Partners, Davidson Kempner Capital Management, and PIMCO reportedly bought a stake in the company in anticipation of the bankruptcy.\n\nEffects\nExperts initially did not expect SVB's collapse to pose a systemic risk to the U.S. financial system. However, although experts think these effects are temporary, the bank's collapse created hardships among some tech startups, and companies holding significant uninsured deposits and low cash flow faced significant risks.\n\nCustomers\n\nAn SVB Private ATM in San Jose, California, on March 12.\nMany startups were unable to retrieve money, resulting in companies taking out loans to make payroll. Because California state law requires employees to be paid within a certain number of days, continued inability to access deposits could have caused a large number of startups to furlough workers, reduce their workforce through layoffs, or shut down entirely. The bank's collapse also reduces available funding for startups on the venture debt market, which has grown in importance as venture capital firms have dramatically scaled back their investments. E-commerce company Etsy was forced to delay seller payouts; the company used SVB to send out deposits to some sellers. The bank's collapse coincided with the beginning of the annual, startup-oriented South by Southwest Interactive conference in Austin, Texas. Aside from some disruption caused by SVB credit cards, attendees maintained an air of calm during the event. In the days after the collapse, startup founders and other customers lined up outside bank branches in Silicon Valley and San Francisco, seeking to withdraw their deposits or learn the status of their wire transfers. Many technology entrepreneurs regained access to their deposits on March 13.\n\nIn a Securities and Exchange Commission (SEC) filing, streaming media company Roku, Inc. revealed that around a quarter of the company's cash reserves\u2014$487 million\u2014were held by SVB. Other companies affected by the collapse include video game developer Roblox Corporation, video hosting service Vimeo, and payroll processor Rippling. More than 1,500 climate change\u2013related technology startups had taken out loans or had lines of credit with Silicon Valley Bank. The failure came at a sensitive time when many such startups were scaling up to meet expected demand from the Inflation Reduction Act of 2022.\n\nOutside the technology startup space, Vox Media and BuzzFeed had its cash concentrated at the bank, and Vox Media saw its SVB-issued credit cards stop working. The California wine industry was also affected by SVB's collapse, since it was a leading regional winery banker. Some Oregon wineries were also affected. The bank's premium wine division had about $1.1 billion in outstanding loans to about 400 clients. California Governor Gavin Newsom's wine companies were among the bank's clients. Businessman Mark Cuban reportedly had millions in the bank, along with his side venture Cost Plus Drugs."textdocument19

pp�
95	M33�mf992dac163e45605780eaf4a3558d4552023-03-22 14:27:492023-03-22 14:27:49"[better source needed]\n\nSince 2002, the bank had made $2.7 billion in loans and investments, including $1.6 billion in loans since 2014, to build nearly 10,000 units of affordable housing in Silicon Valley and San Francisco, as well as affordable housing in Massachusetts (from its 2021 acquisition of Boston Private). The collapse left 11 projects in the San Francisco Bay Area in limbo, plus two more in Los Angeles and the Central Valley. Housing advocates predicted delays and difficulty assembling funding. Some nonprofit organizations expect to deal with fallout from the bank's collapse for months. As a legacy of SVB's Boston Private acquisition, it provided free banking services to many nonprofits in San Mateo County, California, who have needed to redirect donations to alternative bank accounts.\n\nAhmad Thomas, CEO of the Silicon Valley Leadership Group, of which the bank was a member, described the failure as a setback for the San Francisco Bay Area's startup ecosystem and noted that it would be difficult to replicate the bank's business model.\n\nShareholders\nSilicon Valley Bank's holding company, SVB Financial Group, was a component of the S&P 500. At the time of the collapse, its largest shareholders included The Vanguard Group, BlackRock, and State Street Corporation, which owned the stock in large exchange traded funds that track the performance of S&P 500. The South Korean National Pension Service owned 100,000 shares in SVB's holding company, SVB Financial Group. CalPERS (California state pension fund) held about $67 million in bonds to the bank, or less than two percent of one percent of total investments, as of June 2022.\n\nOn March 13, shares of similar regional banks, including First Republic Bank, Western Alliance Bancorporation, and PacWest Bancorp plummeted.\n\nFinancial system\nMarket capitalization of U.S. banks lost a combined $100 billion in two days and European banks lost $50 billion. SVB's losses highlighted the challenge that banks could face as interest rate increases reduced the market value of bonds that they purchased under low-rate policies. Some companies have sought safety with larger commercial banks, transferring their deposits out from regional banks similar to Silicon Valley Bank, raising concerns about further instability in the banking sector. Several banks, such as First Republic Bank and Western Alliance Bancorporation, issued press releases seeking to calm investors.\n\nDespite these concerns, banking experts believe that other banks will remain stable as SVB was overly specialized in providing banking to a risky sector of the economy, and financial regulations have strengthened since the 2008 financial crisis, which preceded the Great Recession. SVB had, in 2021, reached the threshold under the Dodd-Frank Act requiring it to submit a resolution plan (\"living will\") to the FDIC, which it did the following year. It had not participated in periodic stress testing under the act, as the threshold for that requirement had been raised in 2018 under EGRRCPA; SVB's chief executive was among those requesting the change.\n\n"textdocument47

���@	M33�Sd24f195dea5a6341e1e6deaf951a4a8a2023-03-22 14:27:492023-03-22 14:27:49"On March 12, 2023, Signature Bank was also closed, being taken into possession by the New York State Department of Financial Services. Following the bank failures, the Federal Reserve announced the creation of a Bank Term Funding Program to shore up liquidity for other at-risk banks.\n\nCircle, a peer-to-peer payments technology company that issues the stablecoin USD Coin (USDC), attested that SVB is one of the six banking partners used by the company to manage its cash reserves for USDC, with $3.3 billion (approximately 8%) of its cash reserves held there. USDC's price fell below its US$1 pegged exchange rate during trading on March 10 and 11, causing Coinbase to halt conversions between USDC and U.S. dollars. USDC had recovered most of the losses after Circle assured investors that the peg would remain honored.\n\nInvestors and economists believe that a previously expected Federal Reserve interest rate increase on March 22 has become less likely as a result of the SVB collapse and other recent bank failures.\n\nThe failure complicates an ongoing lobbying effort by large banks against the Federal Reserve's requirement that they hold cash equivalents to government-backed securities, such as the Treasury bonds that Silicon Valley Bank invested in.\n\nLegal actions\nOn March 13, the Federal Reserve Board of Governors announced an investigation by Vice Chair for Supervision Michael Barr into supervision and regulation of the bank, which will be released publicly by May 1. The U.S. Securities and Exchange Commission and U.S. Department of Justice have reportedly opened investigations into the bank's financial disclosures and executives' recent trading plans.\n\nOn March 13, an SVB shareholder filed a Securities Class Action against the company in the U.S. District Court for the Northern District of California, alleging fraud for false statements made by executives and the bank.\n\nSenator Elizabeth Warren of Massachusetts introduced legislation, cosponsored by about 50 Democrats in the Senate and House of Representatives, that would roll back some provisions of the EGRRCPA, including regular stress testing. Senator Sherrod Brown of Ohio announced plans to hold a Congressional hearing on the bank's failure.\n\nReactions\nOfficial responses\nU.S. President Joe Biden discussed the collapse with California Governor Gavin Newsom on March 11. In televised remarks from the White House before markets opened on March 13, Biden expressed confidence in the resilience of the banking system, pledged that the government would ensure the availability of deposits without rewarding investors with taxpayer funds, and promised to hold bank executives accountable and propose rule changes to prevent future failures. National Credit Union Administration board members emphasized the safety of the credit union system in contrast to the banking system, but reiterated the importance of effective risk management, including the use of interest rate derivatives, and urged Congress to strengthen the Central Liquidity Facility.\n\nIsraeli Prime Minister Benjamin Netanyahu pledged to take steps to help Israeli technology companies get through the liquidity crisis. Indian IT minister Rajeev Chandrasekhar met with companies to assess the effect on India's startup community. "textdocument39

�u	M33�?1ab2dbca1749e730fa6104db4452f6712023-03-22 14:27:492023-03-22 14:27:49"UK Prime Minister Rishi Sunak, Japanese Chief Cabinet Secretary Hirokazu Matsuno, and South Korea's Financial Services Commission each downplayed any systemic risk to their countries' financial sectors.\n\nDebate over government intervention\nA group of 599 venture capitalists, including Garry Tan and David O. Sacks, along with hedge fund manager Bill Ackman and California State Senator Scott Wiener, called for a government intervention to protect uninsured depositors. Representatives Ruben Gallego of Arizona and Eric Swalwell of California called for depositors to be made whole, while Representatives Ro Khanna and Brad Sherman of California called on the Treasury Department and FDIC to affirm that depositors would be protected so they could make payroll. Khanna pointed to the 1991 collapse of the Bank of New England as precedent for rescuing a regional bank. Representative Matt Gaetz of Florida and Republican presidential candidates Nikki Haley and Vivek Ramaswamy expressed opposition to any taxpayer-funded bailout of the bank. Ramaswamy suggested that the FDIC's deposit insurance limit be raised instead. San Jose Mayor Matt Mahan also called the $250,000 limit \"arcane\".\n\nGovernor Newsom, Senator Kyrsten Sinema of Arizona, and Representative Anna Eshoo of California applauded the FDIC's announcement that it would protect depositors without affecting taxpayers via the Bank Term Funding Program. Mayor Mahan criticized the federal government's response to the bank's failure as slow and indicative of its misunderstanding of Silicon Valley startups' contribution to the national economy. Senators Elizabeth Warren of Massachusetts and Bill Hagerty of Tennessee criticized regulators for protecting large depositors, including some of the venture capital firms that triggered the bank run. Republican lawmakers and financial policy experts criticized the emergency actions as a bailout that could create a moral hazard at other banks. Senator J. D. Vance of Ohio questioned whether the federal government would have taken similar action for a smaller bank or credit union. Economist Paul Krugman compared the failure and resulting government action to the savings and loan crisis. Economist Dean Baker alleged that critics of President Biden's student loan forgiveness program (see Biden v. Nebraska) were being hypocritical in their concern about moral hazard at banks. San Jose Chamber of Commerce CEO Derrick Seaver said any moral hazard was worth staving off the potential risk of allowing depositors to go unprotected.\n\nSenator Warren, Representative Khanna, and Mayor Mahan called for earnings from CEO Greg Becker's recent sale of SVB shares to be clawed back and returned to depositors. Representative Eshoo criticized the last-minute bonuses given to bank employees as \"highly offensive\".\n\nDebate about causes\nCryptocurrency proponents cited the collapse in support of a decentralized monetary system. Others in the tech sector proposed that recent events in the cryptocurrency business, such as the bankruptcy of FTX and the exit of cryptocurrency-focused banks, had conditioned depositors to panic and noted that the FDIC's limited guarantee had no parallel in cryptocurrency.\n\n"textdocument2

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b59c03ea4e4e48bec95e89863ffe699c2023-03-22 14:27:492023-03-22 14:27:49"Senator Warren, Representative Khanna, and Senator Bernie Sanders of Vermont argued that the bank's failure could have been avoided by the stress testing that was required of banks of SVB's size until the passage of the EGRRCPA; they called for the law to be repealed and criticized Becker for having supported it. Warren and Senator Richard Blumenthal of Connecticut asked the Department of Justice and Securities and Exchange Commission to investigate whether senior bank executives had violated any laws.\n\nSenator John Kennedy of Louisiana criticized regulators for lax oversight of the bank. The Bank Policy Institute, which represents large banks, contended that the failures of SVB and Signature Bank were primarily caused by failures of management and supervision, rather than regulation, and stressed its members' resiliency.\n\nSeveral Republicans and conservative commentators argued \u2013 without evidence \u2013 that the bank failed because it was \"woke\" and distracted by its workforce diversity efforts, which are typical of mid-sized and large banks in the U.S. Florida Governor Ron DeSantis, Representative Marjorie Taylor Greene of Georgia, and Tucker Carlson tied the bank's failure to its diversity, equity, and inclusion (DEI) program. Greene and Representative James Comer of Kentucky cited the bank's environmental, social, and corporate governance investment program. Andy Kessler suggested that the presence of minorities and military veterans on the bank's board of directors served as a distraction. The New York Post blamed the DEI efforts of a manager at the UK subsidiary for the risks that arose in the U.S. An allegation spread in conservative media that SVB had donated over $73 million to the \"BLM Movement & Related Causes,\" citing a database that had been created by a conservative organization to purportedly show \"who funded the BLM riots.\"Analysis by Talking Points Memo found the database actually showed corporate donations to a variety of diversity programs that had no apparent relationship to the Black Lives Matter movement. The Associated Press also investigated claims that the collapse was caused by a \"woke agenda\" and found that there was no evidence to support the claims. Representative Nancy Mace of South Carolina criticized other members of Congress for politicizing the bank's failure and urged caution in making public comments that could affect the market."textdocument32

���A	M33�U7cea23b59fb84543a9a57eaac414d5942023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bank: the spectacular unravelling of the tech industry\u2019s banker\nWhile its collapse happened quickly, problems had been festering for years\n\nThe rapid collapse of Silicon Valley Bank has stunned the venture capital and start-up community, but its fate had been sealed almost two years earlier \u00a9\n\nIn early March, 40 chief financial officers from various technology groups gathered in the Utah ski resort of Deer Valley for an annual \u201csnow summit\u201d hosted by Silicon Valley Bank, a crucial financial institution for start-ups.\n\nBarely a week later, on Thursday morning, several of the finance chiefs were exchanging frantic messages about whether they should continue to hold their cash in the bank.\n\nA sale by SVB of $20bn of securities to mitigate a steep drop in deposits had focused investors\u2019 attention on vulnerabilities in its balance sheet. They dumped its stock, wiping $10bn off its shares and crashing the market value of the bank \u2014 worth $44bn just 18 months earlier \u2014 to below $7bn.\n\n\u201cThe prisoner\u2019s dilemma was basically: I\u2019m fine if they don\u2019t draw their money, and they\u2019re fine if I don\u2019t draw mine,\u201d said one of the CFOs, whose company had banked around $200mn with SVB.\n\nBut then some started to move. \u201cI got a text from another friend \u2014 he was definitely moving his money to JPMorgan. It was happening,\u201d the finance chief said. \u201cThe social contract that we might have collectively had was too fragile. I called our CEO and we wired 97 per cent of our deposits to HSBC by midday on Thursday.\u201d\n\nBy Friday morning, the bank was bust. Customers had initiated withdrawals of $42bn in a single day \u2014 a quarter of the bank\u2019s total deposits \u2014 and it was unable to meet the requests. The Federal Deposit Insurance Corporation \u2014 the US bank regulator that guarantees deposits of up to $250,000 \u2014 moved into the bank\u2019s Santa Clara, California, headquarters, declared it insolvent and took control. The run was so swift its coffers were drained in full and carried a \u201cnegative cash balance\u201d of nearly $1bn.\n\nThe rapid collapse of SVB has stunned the venture capital and start-up community, many of whom now face uncertainty about the fate of their bank accounts and business operations. SVB provided banking services to half of all venture-backed tech and life sciences companies in the US and played an outsized role in the life of entrepreneurs and their backers, managing personal finances, investing as a limited partner in venture funds and underwriting company listings.\n\n\u201cIt turned out that one of the biggest risks to our business model was catering to a very tightly knit group of investors who exhibit herd-like mentalities,\u201d said a senior executive at the bank. \u201cI mean, doesn\u2019t that sound like a bank run waiting to happen?\u201d\n\nSVB spectacularly unravelled in that bank run, but its fate had been sealed almost two years earlier.\n\n"textdocument18

���>	M33�Q3cfafb1c085c29ee142d9424033f05c12023-03-22 14:27:492023-03-22 14:27:49"In 2021, at the height of an investment boom in private technology companies, SVB received a flood of money. Companies receiving ever larger investments from venture funds ploughed the cash into the bank, which saw its deposits surge from $102bn to $189bn, leaving it awash in \u201cexcess liquidity\u201d.\n\nSearching for yield in an era of ultra-low interest rates, it ramped up investment in a $120bn portfolio of highly rated government-backed securities, $91bn of these in fixed-rate mortgage bonds carrying an average interest rate of just 1.64 per cent. While slightly higher than the meagre returns it could earn from short-term government debt, the investments locked the cash away for more than a decade and exposed it to losses if interest rates rose quickly.\n\nWhen rates did rise sharply last year, the value of the portfolio fell by $15bn, an amount almost equal to SVB\u2019s total capital. If it were forced to sell any of the bonds, it would risk becoming technically insolvent.\n\nThe investments represented a huge shift in strategy for SVB, which until 2018 had kept the vast majority of its excess cash in securities maturing within 10 years*, according to securities filings.\n\nOne person directly involved in the bank\u2019s finances attributed the policy to a change of leadership within SVB\u2019s key finance functions in 2017 as its assets marched towards $50bn, a threshold above which it would be labelled a \u201csystemically important\u201d lender subject to greater regulatory scrutiny.\n\nThe new financial leadership began to shift an ever greater percentage of excess cash into long-term fixed-rate bonds, a manoeuvre that would appease public shareholders by bolstering its overall profits, albeit only slightly.\n\nBut it appeared blind to the risk that cash pouring in was a symptom of low interest rates that could reverse if they rose. Central banks often increase rates to tamp overexuberance among investors, decisions that generally lead to a slowing of investment in speculative companies such as technology start-ups. SVB\u2019s bond portfolio was exposed to rising rates and so too were its deposits.\n\n\u201cWe had enough risk in the business model. You didn\u2019t need risk in the asset/liability management profile,\u201d said the former executive, referring to the bank\u2019s ability to sell assets to meet its liquidity needs. \u201cThey missed that entirely.\u201d\n\nAs a venture capital investment bubble began to inflate in early 2021, Nate Koppikar, a partner at hedge fund Orso Partners, began studying SVB as a way to bet against the industry at large.\n\n\u201cThe problem with the business model is that when capital dries up, the deposits flee,\u201d said Koppikar. \u201cIt was one of the best ways to short the tech bubble. The fact this bank failed shows that the bubble has burst.\u201d\n\nWhile SVB bankers were entertaining finance chiefs on the Utah slopes in early March, the pressure was rapidly mounting on SVB\u2019s executive team, led by chief Greg Becker.\n\n"textdocument6
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�!��o	M33�1ea5ac3070b6afc5b332a785f34dfe87e2023-03-22 14:27:492023-03-22 14:27:49"As regulators attempt to salvage SVB\u2019s assets and restore customer funds, potentially through a sale of some or all of the bank\u2019s operations this weekend, the collapse has sparked scrutiny of its approach to risk management.\n\nUltimately, it committed a cardinal sin in finance. It absorbed enormous risks with only a modest potential pay-off in order to bolster short-term profits.\n\nOne hedge fund short seller who detailed the bank\u2019s risks last year warned that SVB had almost unwittingly built the foundation for what could become \u201cthe first large US bank collapse in 15 years\u201d.\n\n\u201cThey went for an extra [0.4 percentage points] of yield and blew up the bank,\u201d said the person, whose fund held a bet against SVB. \u201cIt is really sad.\u201d"textdocument44�\	M33�61f094dea10b9f05dbf8e7ce1f929bf82023-03-22 14:27:492023-03-22 14:27:49"Although SVB\u2019s deposits had been dropping for four straight quarters as tech valuations crashed from their pandemic-era highs, they plunged faster than expected in February and March. Becker and his finance team decided to liquidate almost all of the bank\u2019s \u201cavailable for sale\u201d securities portfolio and to reinvest the proceeds in shorter-term assets that would earn higher interest rates and improve the pressure on its profitability.\n\nThe sale meant taking a $1.8bn hit, as the value of the securities had fallen since SVB had purchased them due to surging interest rates. To compensate for this, Becker arranged for a public offering of the bank\u2019s shares, led by Goldman Sachs. It included a large investment from General Atlantic, which committed to buy $500mn of stock.\n\nRecommended\n\nFT News Briefing podcast11 min listen\nSVB\u2019s cardinal sin\n\nThe deal was announced on Wednesday night but by Thursday morning looked set to flop. SVB\u2019s decision to sell the securities had surprised some investors and signalled to them that it had exhausted other avenues to raise cash. By lunchtime, Silicon Valley financiers were receiving last-ditch calls from Goldman, which briefly attempted to put together a larger group of investors alongside General Atlantic to raise capital, as SVB\u2019s share price was tanking.\n\nAt the same time, some large venture investors, including Peter Thiel\u2019s Founders Fund, advised companies to pull their money from SVB. Becker, in a series of calls with SVB\u2019s customers and investors, told people not to panic. \u201cIf everyone is telling each other SVB is in trouble, that would be a challenge,\u201d he said.\n\nSuddenly, the risk that had been building on SVB\u2019s balance sheet for more than a year became a reality. If deposits fell further, SVB would be forced to sell its held-to-maturity bond portfolio and recognise a $15bn loss, moving closer to insolvency.\n\nRival bankers argued the plan was flawed from the outset \u2014 disclosing a $1.8bn loss at the same time as only securing $500mn of the $2.25bn capital raise from an anchor investor. \u201cYou can\u2019t build a book while the market is open and you\u2019re telling people there\u2019s a $2bn hole,\u201d said one senior banker at a competitor.\n\nThere was external pressure, too. Goldman bankers on the capital raise knew the deal was being done in a way that was hard to pull off with an unhelpful market backdrop. But the company was facing a time crunch due to the downgrade by Moody\u2019s to Baa1 from A3 on Wednesday. \u201cTheir hand was forced by the rating agency,\u201d said one person involved in the capital raise. Goldman Sachs declined to comment.\n\nRecommended\n\nRichard Waters\nWith the collapse of Silicon Valley Bank, tech may lose a vital organ\n\nThe scale and speed of the ensuing destruction has had a ripple effect on the technology industry globally.\n\n"textdocument12
�&��	M33�i4fe04f81c0c22c08b43307462b17ad512023-03-22 14:27:492023-03-22 14:27:49"No later than Monday morning, all insured depositors will have full access to their insured deposits, according to the FDIC. It will pay uninsured depositors an \"advance dividend within the next week.\"What's next?\nSo, while a broader contagion is unlikely, smaller banks that are disproportionately tied to cash-strapped industries like tech and crypto may be in for a rough ride, according to Ed Moya, senior market analyst at Oanda.\n\"Everyone on Wall Street knew that the Fed's rate-hiking campaign would eventually break something, and right now that is taking down small banks,\" Moya said on Friday.\nThe FDIC typically sells a failed bank's assets to other banks, using the proceeds to repay depositors whose funds weren't insured.\nA buyer could still emerge for SVB, though it's far from guaranteed."textdocument10�W	M33�132f2401c58d92bd34b5402c32cab4922023-03-22 14:27:492023-03-22 14:27:49"How does a bank collapse in 48 hours? A timeline of the SVB fall\n\nNew York (CNN)This week, the go-to bank for US tech startups came rapidly unglued, leaving its high-powered customers and investors in limbo.\n\nSilicon Valley Bank, facing a sudden bank run and capital crisis, collapsed Friday morning and was taken over by federal regulators.\nIt was the largest failure of a US bank since Washington Mutual in 2008.\nHere's what we know about the bank's downfall, and what might come next.\nWhat is SVB?\nFounded in 1983, SVB specialized in banking for tech startups. It provided financing for almost half of US venture-backed technology and health care companies.\nWhile relatively unknown outside of Silicon Valley, SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC.\nWhy did it fail?\nIn short, SVB encountered a classic run on the bank.\nThe longer version is a bit more complicated.\nSeveral forces collided to take down the banker.\nFirst, there was the Federal Reserve, which began raising interest rates a year ago to tame inflation. The Fed moved aggressively, and higher borrowing costs sapped the momentum of tech stocks that had benefited SVB.\nHigher interest rates also eroded the value of long-term bonds that SVB and other banks gobbled up during the era of ultra-low, near-zero interest rates. SVB's $21 billion bond portfolio was yielding an average of 1.79% \u2014 the current 10-year Treasury yield is about 3.9%.\nAt the same time, venture capital began drying up, forcing startups to draw down funds held by SVB. So the bank was sitting on a mountain of unrealized losses in bonds just as the pace of customer withdrawals was escalating.\n\nThe panic takes root...\nOn Wednesday, SVB announced it had sold a bunch of securities at a loss, and that it would also sell $2.25 billion in new shares to shore up its balance sheet. That triggered a panic among key venture capital firms, who reportedly advised companies to withdraw their money from the bank.\nThe bank's stock began plummeting Thursday morning and by the afternoon it was dragging other bank shares down with it as investors began to fear a repeat of the 2007-2008 financial crisis.\nBy Friday morning, trading in SVB shares was halted and it had abandoned efforts to quickly raise capital or find a buyer. California regulators intervened, shutting the bank down and placing it in receivership under the Federal Deposit Insurance Corporation.\nContagion fears subside\nDespite initial panic on Wall Street, analysts said SVB's collapse is unlikely to set off the kind of domino effect that gripped the banking industry during the financial crisis.\n\"The system is as well-capitalized and liquid as it has ever been,\" Moody's chief economist Mark Zandi said. \"The banks that are now in trouble are much too small to be a meaningful threat to the broader system.\""textdocument1

�v	M33�?907b5d5a9d3746d60a7ef04e6f18d3d02023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bank shutdown leaves start-ups anxious about their funds\nCompanies that banked with California-based lender worry about how they will carry on operating after collapse\n\nThe president of start-up accelerator Y Combinator described SVB\u2019s collapse as an \u2018extinction level event\u2019 for some young companies \u00a9 Reuters\n\ncurrent progress 90%\nGeorge Hammond in San Francisco and Ortenca Aliaj in New York MARCH 10 2023\n182\nPrint this page\nSilicon Valley start-ups are scrambling to pay staff and identify sources of back-up funding after regulators stepped in and shut down Silicon Valley Bank on Friday morning, stranding deposits that serve as the lifeblood of many early-stage technology companies.\n\nThe bank was the 16th largest in the US and a central part of the Silicon Valley ecosystem, serving roughly half of all venture fund-backed technology start-ups and many of their investors.\n\nIt is now in the hands of receivers at the FDIC, leaving deposit holders to contend with immediate operational issues and fret over the possibility that their cash could be out of reach for weeks or months.\n\n\u201cThis is an *extinction level event* for start-ups and will set start-ups and innovation back by 10 years or more\u2009.\u2009.\u2009. All little start-ups, tomorrow\u2019s Google\u2019s and Facebooks, will be extinguished if we don\u2019t find a fix,\u201d Garry Tan, president of prominent start-up accelerator Y Combinator, wrote in a tweet on Friday.\n\n\u201c30% of YC companies exposed through SVB can\u2019t make payroll in the next 30 days,\u201d he added.\n\nThe issue is particularly pressing for smaller companies without large cash reserves.\n\n\u201cRight now everyone is figuring out if their payroll will go through if SVB is supposed to be paying,\u201d said Zach Coelius, a venture capital investor in early-stage companies, many of which exclusively bank with SVB.\n\n\u201cThere\u2019s a lot of money that flows through those bank accounts every day that suddenly is not moving. There will be big consequences for the whole ecosystem. Employees getting paid, suppliers getting paid, financing [rounds] closing.\u201d\n\nRippling, a payroll software company used by start-ups and that relied on SVB\u2019s payment network, moved swiftly to avoid disruption as the bank\u2019s position worsened over Thursday, accelerating a planned shift of its payroll processing to JPMorgan\u2019s infrastructure.\n\nBut it could not act quickly enough to ensure start-up employees were paid as usual on Friday, as SVB\u2019s efforts to raise new capital foundered and account holders raced to move deposits out of the bank. The FDIC later announced it had taken over the bank.\n\n\u201cPay runs in flight for today out of SVB have not been paid,\u201d Parker Conrad, the company\u2019s chief executive, wrote on Twitter on Friday morning.\n\n\u201cThe latest we heard from SVB this morning was that this was an operational delay and funds will be released. However, FDIC involvement makes us sceptical of the assurances we are getting from SVB.\u201d\n\nOne founder whose company has about $100,000 locked in an SVB account was working out how to pay his staff on Friday. "textdocument24

GG�6	M33�?6ac40f14a1c7cfd225d3a7bf3a6707d52023-03-22 14:27:492023-03-22 14:27:49"\u201cWe will eventually get [deposits] back but now the government is involved it could take weeks \u2014 that could cause operational issues. It\u2019s not good,\u201d he said.\n\nRecommended\n\nFT News Briefing podcast10 min listen\nSilicon Valley Bank rattles Wall Street\n\nDeposits of up to $250,000 are federally insured but the majority of SVB clients fall outside that threshold. The bank reported at the end of last year that $151bn of its $173bn in total domestic deposits was uninsured. The FDIC said clients will get access to insured deposits by Monday morning, while uninsured depositors will get an advanced dividend and a receivership certificate for anything above that sum.\n\nStart-ups and investors rushed to pull funds from SVB on Thursday and open accounts at rivals including JPMorgan and specialist banks such as Mercury and Series Financial. But SVB\u2019s central position in the tech ecosystem will be harder to transfer. As well as holding deposits, the lender underwrites tech IPOs, bankrolls entrepreneurs\u2019 pet projects and hosts regular events in California.\n\nThe impact is being felt beyond start-ups. Roku, the $24bn streaming hardware group that went public in 2017, disclosed on Friday that more than a quarter of its $1.9bn in cash and equivalents, about $487mn, were deposited at SVB. It said it was uncertain to what extent it would be able to recover the uninsured portion of the funds.\n\nRecommended\n\nNews in-depthArtificial intelligence\nSceptical investors worry whether advances in AI will make money\n\nDeposit holders interviewed by the Financial Times were hoping for the bank to be bought out of receivership and for a new owner to reopen accounts and resume lending. But if no buyer is found, they feared the situation will deteriorate further.\n\nOne VC said it was fielding calls from nervous start-up founders who wanted advice on how to communicate the payroll issue to employees and feared they would have to start laying people off if no buyer for SVB could be found in the next few days.\n\nCoelius said he and other investors were preparing to write short-term loans to portfolio companies to tide them over if deposits still cannot be accessed on Monday. But, he added, \u201cthere will be companies which will die faster because they don\u2019t get a chance to figure it out\u201d.\n\nAdditional reporting by Patrick McGee"textdocument14
0FF�O	M33�qf48774b246dae87dde687104c3e9c8802023-03-22 14:27:492023-03-22 14:27:49"The bankruptcy case is SVB Financial Group, 23-10367, US Bankruptcy Court for the Southern District of New York."textdocument46�	M33�}87eb407cd18a83a624074df62c2617402023-03-22 14:27:492023-03-22 14:27:49"SVB Financial Must Wait to Get Back $2 Billion from FDIC\n\nBondholders owed over $3.3 billion vow to fight FDIC for cash\nFDIC says SVB Financial should file claim in receivership case\n\nThe former owner of Silicon Valley Bank, seized earlier this month by regulators, will need to wait, possibly for several months, to know if it can get back about $2 billion in cash it would need to repay bondholders and other creditors.\n\nSVB Financial Group won provisional court approval Tuesday to spend only a fraction of the cash the company claims federal regulators must return. What happens with the rest of the money will need to be decided in the coming months, with lawyers for bondholders owed more than $3.3 billion saying they are concerned that the Federal Deposit Insurance Corp. will try to keep the cash.\n\nThe FDIC\u2019s decision to lock down the $2 billion \u201ccreates jeopardy\u201d in the bankruptcy case, said Tom Lauria, a lawyer representing a large bondholder, Appaloosa LP.\n\n\u201cIt seems to be a more urgent issue than a latent one in the context of this case,\u201d Lauria told US Bankruptcy Judge Martin Glenn during a hearing in federal court in Manhattan.\n\nUnder FDIC receivership rules it can take months for the agency to decide whether the money will be returned and then years if that decision is appealed, lawyers said during the hearing. The claims process could be resolved \u201csometime in the next century,\u201d Glenn joked.\n\nClosely Entangled\nA major issue for lawyers representing the parties involved \u2014 which include the FDIC, Silicon Valley Bridge Bank NA and SVB Financial \u2014 is that their operations are closely linked.\n\n\u201cThere are a lot of interconnections between the bank and the debtors,\u201d said Sandeep Qusba, a lawyer representing the bridge bank, which was established as a result of the FDIC seizure. SVB Financial sponsors the bank\u2019s employee benefits, for instance. The two also share some of the same vendors.\n\nBut the bridge bank is under the federal government\u2019s purview. The dispute over the $2 billion pits the mission of the FDIC \u2014 returning money to depositors \u2014 against the priorities of bankruptcy, which is to repay creditors like the bondholders, who hold big claims against SVB.\n\nRead More: Most of SVB Financial\u2019s Cash Sent to FDIC, Bridge Bank Says\n\nThe FDIC may argue it\u2019s a creditor in the bankruptcy case and file a claim that competes with the bondholders. Lauria argued that any fight over the $2 billion should happen in bankruptcy court.\n\n\u201cThe FDIC seems to believe they can resolve their claims away from this court,\u201d he said.\n\nSVB has worked out a number of minor disputes about sharing information and allowing its former employees, who now work for the FDIC-controlled bridge bank, to cooperate with the bankrupt holding company, SVB lawyer James Bromley said in court.\n\nBut the main question is what happens to the $2 billion, he said.\n\n"textdocument21�

,,�Q	M33�u99f68ea98de5f44ba086d6430c7815b02023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bank\u2019s collapse will not be a one-off \u2013 a banking crisis was long overdue\n\nIt has been a year since the Federal Reserve started to raise interest rates and banks are starting to fall over in the US. Anybody who thinks Silicon Valley Bank was a one-off is deluding themselves. Financial crises have occurred on average once a decade over the past half century so the one unfolding now is if anything overdue.\n\nThe reckoning has been delayed because since 2008 banks have been operating in a world of ultra-low interest rates and periodic injections of electronic cash from central banks. Originally seen as a temporary expedient in the highly stressed conditions after the collapse of Lehman Brothers, cheap and plentiful money became a constant prop for the markets.\n\nOver the years, there was debate about what would happen were central banks to raise interest rates and to suck the money they had created out of the financial system. Now we know.\n\nThe action deemed necessary to rein in inflation has deflated housing bubbles, sent share prices plunging and left banks nursing big losses on their holdings of government bonds.\n\nThe Bank of England was quicker out of the blocks than the Fed. Threadneedle Street began raising rates in December 2021 and has now raised them 10 times in a row. The European Central Bank waited until July last year before making the decision to increase borrowing costs for the first time in a decade, and went ahead with an increase last week despite news that the banking malaise had spread across the Atlantic to Credit Suisse.\n\nIgnore the fact that the US, UK and eurozone economies have all held up better than was expected in the immediate aftermath of the energy price shock caused by Russia\u2019s invasion of Ukraine. It takes time for changes in monetary policy \u2013 the decisions central banks make on interest rates and bond-buying or selling \u2013 to have an impact.\n\nAs Dhaval Joshi of BCA Research pointed out last week there are three classic signs that a recession is coming in the US: a downturn in the housing market, bank failures, and rising unemployment. Housebuilding is down by 20% in the past year, which means the first has already happened. The problems at SVB and other US regional banks suggest the second condition is now being met. The third harbinger of a US recession is a rise in the US unemployment rate of 0.5 percentage points. So far it is up by 0.2 points.\n\n\u201cBanks tend to fail just before recessions begin,\u201d Joshi says. \u201cAhead of the recession that began in December 2007, no US bank failed in 2005 or 2006. The first three bank failures happened in February, September, and October of 2007, just before the recession onset.\n\n\u201cFast forward, and no US bank failed in 2021 or 2022. The first bank failures of this cycle \u2013 Silicon Valley Bank and Signature Bank \u2013 have just happened. "textdocument26

rr�	M33�i8a2b6c1a7bcb36db6a00cd0460e6174f2023-03-22 14:27:492023-03-22 14:27:49"If history is any guide, the start of bank failures presages an economic recession that is more imminent than many people anticipate.\u201d\n\nThe Fed and the Bank of England meet to make interest-rate decisions this week and the financial markets think that in both cases the choice is between no change and a 0.25 point increase. Frankly, it should be a no-brainer. Given the lags involved, even a cut in interest rates would be too late to prevent output from falling in the coming months, but against a backdrop of falling inflation, plunging global commodity prices and evidence of mounting financial distress any further tightening of policy would be foolish.\n\nCentral banks seem to think there is no problem in achieving price stability while maintaining financial stability. Good luck with that. The Fed, the ECB and the Bank of England have tightened policy aggressively and things are starting to break.\n\nIt wasn\u2019t always thus. There was a marked absence of banking crises in the 25 years after the second world war, a period when banks were much more tightly regulated than they are today, and played a more peripheral economic role. Reforms put in place after the Great Depression, including capital controls and the US separation of retail and investment banking were designed to ensure governments could pursue their economic objectives without fear that they would be blown off course by runs on their currencies or turmoil in the markets.\n\nOver the past 50 years, the financial sector has been liberalised and grown much bigger. Regulation and supervision has been tightened since the global financial crisis but with only limited effect. SVB was supposed to be a small bank that could operate with less stringent regulation than a bank deemed to be \u201csystemically important\u201d. Yet when it came to the crunch, all the depositors of SVB were protected, making the distinction between a systemic and non-systemic bank somewhat academic. The financial system as a whole is both inherently fragile and too big to fail.\n\nThere is not the remotest possibility of a return to the curbs on banks that were in place during the 1950s and 1960s. Desirable though that would be, there is no political appetite for taking on an immensely powerful financial sector. But that, as has become evident in the past 15 years, has its costs.\n\nOne is that economies dominated by the financial sector only really deliver for the better off: the owners of property and shares. A second is that the financial markets have become hooked on the stimulus that has been provided by central banks. A third is that the crises endemic to the system become much more likely when \u2013 as now \u2013 that stimulus is removed. Which means that eventually more stimulus will be provided, the markets will boom, and the seeds of the next crash will be sown."textdocument22

�
�J�e	M33�78b27391ca455a08ba0ff51ed10b25c22023-03-22 14:27:492023-03-22 14:27:49"Wondering what the hell just happened at SVB? Here's everything you need to know\n\nSilicon Valley Bank, a once-trusted banker to startups, was closed down by regulators on Friday.\nThe collapse sent shockwaves through the industry as startups worried about logistics and payroll.\nSVB became the latest casualty of a bank run as VCs and founders rushed to protect their funds.\n\nOnly last month, Silicon Valley Bank ranked among the top 20 in Forbes' list of best US banks of 2023.\n\nBy Friday afternoon, the once-trusted bank of venture capital investors and tech startups was closed down by regulators, in what has now become the second-largest bank failure in the US.\n\nAny deeper, long-standing reasons behind SVB's sudden collapse will no doubt unfold in the coming days, but the coup de gr\u00e2ce appeared to be a traditional bank run. On Thursday, more startup founders moved to make withdrawals, apparently rattled by SVB's falling stock and the losses that the bank took on the sale of $21 billion in bond investments.\n\nThe bank had already been experiencing headwinds from \"continued higher interest rates, pressured public and private markets, and elevated cash burn,\" Greg Becker, the CEO of Silicon Valley Bank, wrote to investors on Wednesday.\n\nBecker left the board of the San Francisco Federal Reserve Bank on Friday, according to a report by Reuters.\n\nWhile some tech founders had at first advised against anxious moves, they couldn't turn a tide that exploded into an all-out crash \u2014 the stock of the bank, which said it served about half of US startups that venture capital firms invested in, had dropped about 86% by Friday.\n\nAs part of the closure, Federal Deposit Insurance Corporation, the agency that helps insure customers' bank funds, has now taken control of SVB. The agency is prioritizing returning insured deposits within days, and devising ways to offer recoveries for customers with uninsured deposits, it said in a statement on Friday.\n\nA representative for SVB did not respond to Insider's requests for comment.\n\nSVB's now historic collapse puts it second only to the fall of Washington Mutual during the 2008 subprime mortgage crisis, according to data from the FDIC.\n\nThe latest fallout will pose administrative and existential questions in a tech industry already shaken up by layoffs \u2014  What kind of recoveries can customers with uninsured deposits expect? How will startup companies handle logistics, as many are already fretting about how they'll pay employees now? Will SVB find any buyers?\n\n"textdocument17�3	M33�9717002df0dc0a48fed4ebc9ee5d1d91f2023-03-22 14:27:492023-03-22 14:27:49"Read Insider's coverage so far of SVB's dramatic downfall:\n\n\u200b\u200bSilicon Valley is turning on its bank\n\nSVB plummets 60% after higher interest rates spark billions in losses on a $21 billion bond portfolio\n\nAs Silicon Valley Bank's troubles incite panic, some tech founders call for calm: 'We have a collective responsibility'\n\nSilicon Valley Bank has been shut down by regulators\n\nSilicon Valley Bank crisis: Everything you need to know about SVB Financial as regulators shut down the bank\n\nSilicon Valley Bank is the biggest US bank collapse since Washington Mutual during the 2008 financial crisis\n\nNYPD called to Silicon Valley Bank branch to respond to 'disorderly group' after SVB's shocking collapse\n\nStartups that use Silicon Valley Bank are freaking out over whether they'll make next week's payroll: 'Our money is gone'"textdocument16

33�J	M33�g8ff096450d9449edcc3fc228947a3e042023-03-22 14:27:492023-03-22 14:27:49"With the collapse of Silicon Valley Bank, tech may lose a vital organ\nInstitution played an important role in the sector\u2019s smooth functioning\nRICHARD WATERSAdd to myFT\n\nThe flood of cash into the tech start-up scene in recent years has led to persistent warnings of disaster. Most often, these have turned on the kind of meltdown that hit Silicon Valley at the turn of the century, when a stampede to make money on the early internet led to massive over-investment.\n\nIt\u2019s safe to say, though, that none of the disaster scenarios envisaged the kind of financial implosion that struck this week at SVB Financial, the parent company of Silicon Valley Bank.\n\nAs an institution that is estimated to work with half of local tech start-ups, its collapse presents an obvious threat. It led the head of Y Combinator, San Francisco\u2019s pre-eminent accelerator for early stage tech companies, to warn on Friday that Silicon Valley\u2019s start-ups could be facing an \u201cextinction-level event\u201d.\n\nIn many ways, this looks like a familiar tale in the banking world: In pursuit of higher returns, SVB failed to notice what, in hindsight, seems an obvious flaw in its risk management. Its assets soared nearly three-fold in the space of three years as capital poured into start-ups and was deposited, in turn, at the bank. SVB put much of the money into longer-maturity bonds to generate a higher return. When interest rates rose, the market value of those investments slumped, leaving the bank with losses that, on paper, stood at $15bn at the end of last year.\n\nRather than sell the bonds and take a hit, SVB hoped to nurse its low-yielding bond portfolio through to maturity, suffering lower net interest margins along the way. The plan might have worked. But it emerged this week that the bank\u2019s start-up customers, facing more difficult times, had been drawing down their cash, forcing it to sell investments and take a loss. The resulting need for more capital set alarm bells ringing and led to a flight by depositors: By Friday morning, regulators had to step in and close SVB down.\n\nHeading into the weekend, it was impossible to tell exactly how deeply this financial shock would hit tech start-ups with deposits that have now been frozen. SVB\u2019s surplus capital at the end of last year was roughly enough to absorb its notional losses at that stage. Even after a further $1.8bn hit it reported this week, the losses still look modest in the context of a total deposit base that stood, in December, at $173bn (though $42bn flew out the door on Thursday alone.)Yet the losses could well escalate as regulators carry out a forced sale of the bank\u2019s assets. Even more damaging, for many start-ups, is the risk that their much-needed cash will be locked up indefinitely, leaving them unable to meet immediate commitments like staff salaries and forcing some to close their doors.\n\n"textdocument23

���	M33�cc11fcacc3be4bfde5d05831da8cfff0d2023-03-22 14:27:492023-03-22 14:27:49"There has been no shortage of people seeking to turn this into a Silicon Valley morality tale. To some, it is another example of the tech world\u2019s hubris, and proof that the good times blinded the tech industry to some very real risks. Why, for instance, did a public company like streaming video outfit Roku leave $487mn on deposit at what until recently barely counted as a medium-sized bank in US terms?\n\nTo others, meanwhile, the fallout from the SVB collapse is a reminder of how Silicon Valley, which usually fights hard to escape the heavy hand of government regulation, is quick to ask Washington for support when a crisis hits. Tan, the tech accelerator boss who warned of extinction, urged tech entrepreneurs to write to their local Congressional representatives calling for immediate government help.\n\nBy late Friday, the finger-pointing also had begun. The run on the bank that laid SVB low has been held up as an example of the herd-like behaviour often displayed by tech investors. A number of venture capital firms urged companies they had invested in to take their cash out of SVB after the bank said it was seeking to raise more capital. A partner at one prominent venture firm told me such withdrawals had caused a crisis that was entirely avoidable. Meanwhile, more than a dozen VC firms had banded together to promise they would stand behind SVB in future, should another institution step in to bail it out \u2014 though a number of well-known Silicon Valley firms were not part of the group.\n\nThe scramble among VCs underlined a dawning sense that, if SVB is wound up, something irreplaceable may be lost. One investor described the bank as \u201clike a left ventricle\u201d for Silicon Valley\u2019s financial scene \u2014 not as visible as the VCs which supply the risk capital that has floated the modern tech industry, but vital to the sector\u2019s smooth functioning. It was founded 40 years ago to fill the void left by big banks that often baulked at lending to start-ups. The VC firms that banded together on Friday night hope that it\u2019s not too late revive the bank. But if it is, Silicon Valley will have lost an institution that has played an important role in its rise."textdocument34
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::�C	K33�[fbe506b91320efb6f970fd4a10169e82023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bank left a void that won\u2019t easily be filled\nIt\u2019s difficult to overstate the influence that Silicon Valley Bank had over the startup world and the ripple effect its collapse this month had on the global tech sector and banking system.\n\nWhile SVB was largely known as a regional bank to those outside of the tight-knit venture capital sphere, within certain circles it had become an integral part of the community \u2013 a bank that managed the idiosyncrasies of the tech world and helped pave the way for the Silicon Valley-based boom that has consumed much of the economy over the past three decades.\n\nSVB\u2019s collapse was the largest bank failure since the 2008 financial crisis: It was the 16th largest bank in the country, holding about $342 billion in client funds and $74 billion in loans.\n\nAt the time of its collapse, about half of all US venture-backed technology and life science firms were banking with SVB. In total, it was the bank for about 2,500 venture firms including Andreessen Horowitz, Sequoia Capital, Bain Capital and Insight Partners.\n\nBut the influence of SVB went beyond lending and banking \u2013 former CEO Gregory Becker sat on the boards of numerous tech advocacy groups in the Bay Area. He chaired the TechNet trade association and the Silicon Valley Leadership Group, was a director of the Federal Reserve Bank of San Francisco and served on the United States Department of Commerce\u2019s Digital Economy Board of Advisors.\n\nThere\u2019s no doubt that the failure of Silicon Valley Bank left a large void in tech. The question is how that gap will be filled.\nTo find out, Before the Bell spoke with Ahmad Thomas, president and CEO of the Silicon Valley Leadership Group. The influential advocacy group is working to convene its hundreds of member companies \u2013 including Amazon, Bank of America, BlackRock, Google, Microsoft and Meta \u2013 to discuss what happens next.\n\nThis interview has been edited for length and clarity.\n\nBefore the Bell: What\u2019s the feeling on the ground with tech and VC leadership in Silicon Valley?\n\nAhmad Thomas: Silicon Valley Bank has been a key part of our fabric here for four decades. SVB was truly a pillar of the community and the innovation economy. The absence of SVB \u2013 that void \u2013 and coalescing leaders to fill that void is where my energy is focused and that is not a small task.\n\nI would say there was a fairly high level of unease a few days ago, and I believe the swift steps taken by leaders in Washington have helped quell a fair amount of that unease, but looking at Credit Suisse and First Republic just over the last couple of days, clearly we are in a situation that is going to continue to develop in the weeks and months ahead.\n\nSo how do you fill it?\nWe\u2019re working to be a voice around stability, particularly about the fundamentals of the innovation economy. "textdocument48

���	M33�e3ed5467af3ea7f9d8e1eca6bcecdbe522023-03-22 14:27:492023-03-22 14:27:49"We can acknowledge the void given the absence of Silicon Valley Bank, but I do think we need voices out there to be very clear in highlighting that the fundamentals and the innovation infrastructure remains robust here in Silicon Valley.\n\nThis is a moment where I think people need to take a step back, let cooler heads prevail, and understand that there are opportunities both from an investment standpoint, a community engagement standpoint and corporate citizenship standpoint for new leaders in Silicon Valley to step up.\n\nAre you working to advocate for more permanent regulation in DC?\n\nIt\u2019s far too early for that. But if there are opportunities to enhance access to capital to entrepreneurs to founders of color or in marginalized communities and if there are opportunities to try and drive innovation and economic growth, we will always be at the table for those conversations.\n\nDo you have any ideas about how long this crisis will continue for? What\u2019s your outlook?\n\nThe problem is twofold: A crisis of confidence and the set of economic conditions on the ground. The economic conditions remain volatile for a variety of reasons: The softening economy, inflationary pressures and the interest rate environment. But I think right now we need to focus on stabilizing confidence in the investor community, in our business executive community and in the broader set of stakeholders around the strength of the innovation economy. That is something we need to shore up near term.\n\nUBS is buying Credit Suisse in bid to halt banking crisis\nFrom CNN\u2019s Mark Thompson\n\nSwitzerland\u2019s biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse (CS) in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month.\n\n\u201cUBS today announced the takeover of Credit Suisse,\u201d the Swiss National Bank said in a statement. It said the rescue would \u201csecure financial stability and protect the Swiss economy.\u201d\n\nUBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the bank was worth when markets closed on Friday. Credit Suisse shareholders will be largely wiped out, receiving the equivalent of just 0.76 Swiss francs in UBS shares for stock that was worth 1.86 Swiss francs on Friday.\n\nExtraordinarily, the deal will not need the approval of shareholders after the Swiss government agreed to change the law to remove any uncertainty about the deal.\n\nCredit Suisse had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis. But confidence collapsed last week after it acknowledged \u201cmaterial weakness\u201d in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.\n\nRead more here.\n\n"textdocument7

103�104��F 	M33�_b1ddd866e5e9050d316ab99d393bd8102023-03-22 14:27:492023-03-22 14:27:49"FDIC sells most of failed Signature Bank to Flagstar\nFrom CNN\u2019s David Goldman\n\nA week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank, a subsidiary of New York Community Bank.\n\nOn Monday, Signature Bank\u2019s 40 branches will begin operating as Flagstar Bank. Signature customers won\u2019t need to make any changes to do their banking Monday.\n\nNew York Community Bank bought substantially all of Signature\u2019s deposits and a total of $38.4 billion worth of the company\u2019s assets. That includes $12.9 billion of Signature\u2019s loans, which New York Community Bank purchased at a steep discount -\u2014 it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stock that could be worth up to $300 million.\n\nAt the end of last year, Signature had more than $110 billion worth of assets, including $88.6 billion of deposits, showing how the run against the bank two weeks ago led to a massive decline in deposits.\n\nNot included in the transaction is about $60 billion in other assets, which will remain in the FDIC\u2019s receivership. It also doesn\u2019t include $4 billion in deposits from Signature\u2019s digital bank business."textdocument30
ss��!	I33�e3e112e9dd6270fa473a1276f9acb22023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bank's former owner, FDIC bracing for fight over $2 bln\n\nMarch 21 (Reuters) - SVB Financial Group (SIVB.O) and the federal regulator that closed its Silicon Valley Bank unit indicated at a bankruptcy court hearing on Tuesday that a fight is looming over $2 billion of the former parent company's cash that was seized along with the lender.\n\nSVB Financial, which filed for bankruptcy on Friday, had said in court papers the U.S. Federal Deposit Insurance Corporation took \"improper actions\" to cut off the parent company from its cash held at its former subsidiary, which was seized by regulators to stem a national bank run.\n\nSVB Financial's attorney told U.S. Bankruptcy Judge Martin Glenn at a hearing in Manhattan that the financial company lost access to its deposits the day before it filed for Chapter 11 protection.\n\n\"Not only has the bank been taken, all the cash has been taken,\" said James Bromley, an attorney for SVB Financial.\n\nCalifornia banking regulators on March 10 closed Silicon Valley Bank in the largest U.S. bank failure since the 2008 financial crisis.\n\nThe collapse of the Santa Clara, California-based bank and Signature Bank (SBNY.O), another U.S. midsized lender, prompted a rout in banking stocks as investors worried about other ticking bombs in the banking system and led to UBS Group AG's (UBSG.S) takeover of 167-year-old Credit Suisse Group AG (CSGN.S) to avert a wider crisis.\n\nKurt Gwynne, an attorney for the FDIC as receiver for Silicon Valley Bank, disputed at Tuesday's hearing that regulators had done anything improper. He also said there may be fights over the money SBF Financial had on deposit at the bank.\n\n\"There was nothing wrong with freezing accounts and trying to protect deposits\" before the bankruptcy filing, Gwynne said.\n\nMarshall Huebner, an attorney representing creditors who hold more than half of SVB Financial's bond debt, said in court that the FDIC should not be allowed hold the parent company's deposits indefinitely while creditors are owed $3.4 billion.\n\nIllustration shows destroyed SVB (Silicon Valley Bank) logo\nDestroyed SVB (Silicon Valley Bank) logo is seen in this illustration taken March 13, 2023. REUTERS/Dado Ruvic/Illustration/File Photo\nGwynne said that the FDIC and other regulators took steps to insure all bank deposits as a way of preventing a banking panic and without those steps, there would be nothing of value at SVB Financial to fight over.\n\nHe also said that SVB Financial was not just a depositor, but also a shareholder of the bank and shareholders were not being protected by regulators.\n\nGlenn said he did not believe at this time that the FDIC acted improperly.\n\nBromley said there were bidders for SVB Financial's businesses, which include venture capital and investment banking units. Those units were excluded from the FDIC takeover.\n\nWhile SVB Financial lost access to around $2 billion, it still has access to over $180 million in accounts at other banks. "textdocument43�k"	K33�+c495a1c5ef13caf6d83a3af7d2081bd2023-03-22 14:27:492023-03-22 14:27:49"Glenn said he was prepared to allow SVB Financial to use up to $100 million for investment activity.\n\nThe FDIC has said in court filings that it is holding SVB Financial's funds while investigating potential claims against it.\n\nSVB Financial and two top executives were sued last week by shareholders who accused them of concealing how rising interest rates would leave the Silicon Valley Bank unit \"particularly susceptible\" to a bank run.\n\nSVB Financial has $3.4 billion in debt and it manages about $9.5 billion of other investors' money across its portfolio of venture capital and credit funds, according to court filings.\n\nSilicon Valley Bank was SVB Financial's largest asset, accounting for more than $15.5 billion of SVB Financial's $19.7 billion in total assets."textdocument35

�g#	M33�!aab6a9a22f3404da414ad5037bb2e0e02023-03-22 14:27:492023-03-22 14:27:49"SVB execs sold millions of their company stock in lead up to collapse, federal disclosures show\n\nLess than two weeks before Silicon Valley Bank became the largest bank failure since the 2008 financial crisis, top executives at the company sold stock totaling several million dollars, according to federal disclosures obtained by ABC News.\n\nFormer SVB President and CEO Greg Becker sold over $3.5 million of his company stock holdings on Feb. 27, according to a disclosure made to the U.S. Securities and Exchange Commission filed on March 1.\n\nBecker wasn't the only member of SVB's top brass to sell company common stocks. In a separate FEC disclosure, also filed March 1, SVB Chief Financial Officer Daniel Beck sold $575,180 in company common stocks on Feb. 27.\n\nABC News reported this week that the Justice Department and Securities and Exchange Commission are probing the collapse of Silicon Valley Bank, according to two people familiar with the situation.\n\nThe probes, which are separate, are in the preliminary stages and it is not clear whether any wrongdoing has been committed. It is not unusual after a large public collapse of a bank or company for the Justice Department or SEC to step in and investigate.\n\nPHOTO: Greg Becker, President and CEO of Silicon Valley Bank (SVB), speaks during the Milken Institute Global Conference in Beverly Hills, Calif., May 3, 2022.\nGreg Becker, President and CEO of Silicon Valley Bank (SVB), speaks during the Milken Institute Global Conference in Beverly Hills, Calif., May 3, 2022.\nPatrick T. Fallon/AFP via Getty Images, FILE\nSources are telling ABC News that part of the FBI's early focus will be looking into whether any of Silicon Valley's senior leadership got unusual bonuses or sold stocks in the days leading up to the bank's collapse. In short -- is there any evidence of insider trading.\n\nThe U.S. Justice Department and SEC both declined ABC News' requests for comment.\n\nIn the days following Becker's sale of millions of dollars in his SVB shares and before the bank's collapse, the then-CEO appeared confident during remarks to an audience of investors, Wall Street analysts and technology executives attending a technology conference in San Francisco's Palace Hotel, according to a copy of his remarks obtained by ABC News.\n\nOne day after Becker's reported remarks, SVB announced a $1.8 billion loss on the sale of securities, including Treasury and mortgage bonds which had lost significant value over the previous year due to an aggressive series of interest rate hikes at the Federal Reserve. The bank laid out plans to raise more than $2 billion in an effort to shore up its balance sheet.\n\nAccording to the New York Times, the week before Becker's confident projection at the tech conference \u2013 and then the bank's ultimate collapse \u2013 the rating agency Moody's had called to tell Becker \"the banks bonds were in danger of being downgraded to junk.\""textdocument28

11�L$	M33�kcfa4f33c4993ad8486740d7aba140cd72023-03-22 14:27:492023-03-22 14:27:49"That would mean the call came around the same time Becker sold the over $3.5 million of his SVB common stock on Feb 27.\n\nMORE: Silicon Valley Bank: How a digital bank run accelerated the collapse\nAsked by ABC News to confirm the call, a spokesperson for Moody's declined to comment.\n\nBecker did not respond to multiple requests from ABC News for comment. Silicon Valley Bank spokespeople directed queries from ABC News to the Federal Deposit Insurance Corporation.\n\nIn the bank's SEC annual report for the end of 2022, filed on Feb. 24, under \"Credit Risks,\" the company wrote, \"Because of the credit profile of our loan portfolio, our levels of nonperforming assets and charge-offs can be volatile. We have and may in the future need to make material provisions for credit losses in any period, which could reduce net income, increase net losses or otherwise adversely affect our financial condition in that period. Our loan portfolio has a credit profile different from that of most other banking companies. The credit profiles of our clients vary across our loan portfolio, based on the nature of our lending to different market segments.\n\nMORE: Is this a banking crisis? What to know about the Silicon Valley Bank collapse\nAnother risk factor, the company disclosed, was that their \"interest rate spread may further decline in the future. Any material reduction in our interest rate spread could have a material adverse effect on our business, results of operations or financial condition.\"Under the subsection for \"Legal, Compliance and Regulatory Risks,\" SVB said the same regulations now deemed to have been not strong enough were so cumbersome that they could risk business at the company.\n\n\"We are subject to extensive regulation that could limit or restrict our activities, impose financial requirements or limitations on the conduct of our business, or result in higher costs to us, and the stringency of the regulatory framework applicable to us may increase if, and as, our balance sheet continues to grow,\" SVB wrote in its annual filing.\n\n\"As a bank holding company with more than $100 billion of average total consolidated assets, we are subject to stringent regulations, including certain enhanced prudential standards applicable to large bank holding companies. If we exceed certain other thresholds, we will become subject to even more stringent regulations,\" it added."textdocument38

���&%	M33�d4933dea8cff47f0fee170d7fbc4952f2023-03-22 14:27:492023-03-22 14:27:49"Until bankers have more to lose themselves, collapses like SVB and Credit Suisse will keep happening\n\nExecutives at Silicon Valley Bank (SVB) and Credit Suisse took substantial risks. SVB proactively expanded the bank\u2019s deposits, some might say excessively. These depositors were uninsured and undiversified. And back when interest rates were low, the bank invested significantly in US government bonds, which was fine at the time. But when there were signs that interest rates were rising and creating substantial interest rate risk, managers left this portfolio unhedged and unchanged. How come SVB managers took those risks? It seemed that they lacked \u201cskin in the game\u201d.\n\nThe risks taken by executives at Credit Suisse were of a different nature, but still substantial. By becoming involved in such companies as the now defunct Greensill and Archegos, the bank\u2019s capital took a hit. The fines it has accrued after facing scandal after scandal have also bitten into its capital. It can be said that those involved also lacked skin in the game.\n\nIn the aftermath of the 2008 financial crisis, there have been efforts on both sides of the Atlantic to ensure that future bailouts of depositors would involve as little taxpayer money as possible, and would penalise bank owners. The Dodd-Frank Act in the US, for example, seemed to promise that, should a bailout of depositors be needed, shareholders would take the hit. If a bank needed to be closed and restructured, shareholders would bear losses and some creditors\u2019 bonds would be converted into stock, which could lead to substantial future losses. Regulations in the UK and the eurozone went in similar directions.\n\nThese were extremely welcome efforts. Differentiating depositors (who can know almost nothing about a bank\u2019s operations) and bank owners (who should in theory know and monitor things a lot more) makes a lot of sense. The problem is that despite this new rulebook, significant cracks remain, meaning bank executives can still get out unscathed \u2013 and will continue to take risks that threaten the stability of the entire financial system.\n\nLet\u2019s take the SVB example. After its failure, depositors were bailed out, and shareholders made to take losses. So far, so good. Except that some executives at the very top bore almost no losses at all \u2013 in fact, they made a profit. They sold their shares two weeks before failure, when there was no public information yet about the state of SVB, so its shares were still high. The problem is that they did this perfectly legally. Here\u2019s how.\n\nFinancial regulators have long recognised the potential for such behaviour, and have rules against what is called insider trading \u2013 the sale (or purchase) of shares motivated by internal information that is not known to the public yet. There is a sense in which executives always have more information than the public, but surely one can\u2019t bar them from selling their shares at all times? "textdocument40

105�106��?&	M33�S4a4142ef0189a494d44d0b6fef0a2dae2023-03-22 14:27:492023-03-22 14:27:49"Therefore a law was passed that said an executive could file a plan to sell their shares one month in the future, since public information can change and share prices fall.\n\nThe executives filed exactly such a plan; and yet a month afterwards, the public still didn\u2019t know about SVB\u2019s difficulties \u2013 so share prices were still high and executives reaped a profit. There is therefore a discrepancy between what the law is trying to achieve and what it does achieve. A law has just been passed to increase the waiting period to three months \u2013 but is that really going to change the game? In this particular case, it would have; but in others it may not. One would guess that these executives made a prediction that they would not be penalised, so they took these risks without much skin in the game.\n\nThis calls for a fundamental rethink of shareholder liability rules. If executives want to decide exactly when to sell their shares \u2013 let them. But let\u2019s make sure they remain liable for any losses at the bank for at least one year. That way, executives remain free to sell, but remain liable for the bank\u2019s difficulties for a long time after.\n\nSkin in the game is absolutely key to averting financial crises."textdocument8

``�'	M33�
dd9a68287f29357b4245e6f1defb1fc62023-03-22 14:27:492023-03-22 14:27:49"Why Silicon Valley Bank collapsed and what it could mean\n\nSilicon Valley Bank collapsed with astounding speed on Friday. Investors are now on edge about whether its demise could spark a broader banking meltdown.\n\nThe US federal government has stepped in to guarantee customer deposits, but SVB\u2019s downfall continues to reverberate across global financial markets. The government has also shut down Signature Bank, a regional bank that was teetering on the brink of collapse, and guaranteed its deposits.\n\nIn a sign of how seriously officials are taking the SVB failure, US President Joe Biden told Americans Monday that they \u201ccan rest assured that our banking system is safe,\u201d adding: \u201cWe will do whatever is needed on top of all this.\u201d\n\nHere\u2019s what you need to know about the biggest US bank failure since the global financial crisis.\n\nWhat is Silicon Valley Bank?\nEstablished in 1983, Silicon Valley Bank was, just before collapsing, America\u2019s 16th largest commercial bank. It provided banking services to nearly half of all US venture-backed technology and life science companies.\n\nIt also has operations in Canada, China, Denmark, Germany, Ireland, Israel, Sweden and the United Kingdom.\nSVB benefited hugely from the tech sector\u2019s explosive growth in recent years, fueled by ultra-low borrowing costs and a pandemic-induced boom in demand for digital services.\n\nThe bank\u2019s assets, which include loans, more than tripled from $71 billion at the end of 2019 to a peak of $220 billion at the end of March 2022, according to financial statements. Deposits ballooned from $62 billion to $198 billion over that period, as thousands of tech startups parked their cash at the lender. Its global headcount more than doubled.\n\nWhy did it collapse?\nSVB\u2019s collapse came suddenly, following a frenetic 48 hours during which customers yanked deposits from the lender in a classic run on the bank.\n\nBut the root of its demise goes back several years. Like many other banks, SVB ploughed billions into US government bonds during the era of near-zero interest rates.\n\nWhat seemed like a safe bet quickly came unstuck, as the Federal Reserve hiked interest rates aggressively to tame inflation.\n\nWhen interest rates rise, bond prices fall, so the jump in rates eroded the value of SVB\u2019s bond portfolio. The portfolio was yielding an average 1.79% return last week, far below the 10-year Treasury yield of around 3.9%, Reuters reported.\nAt the same time, the Fed\u2019s hiking spree sent borrowing costs higher, meaning tech startups had to channel more cash towards repaying debt. At the same time, they were struggling to raise new venture capital funding.\n\nThat forced companies to draw down on deposits held by SVB to fund their operations and growth.\nWhat sparked the bank run?\nWhile SVB\u2019s problems can be traced back to its earlier investment decisions, the run on the bank was triggered Wednesday when the lender announced that it had sold a bunch of securities at a loss and would sell $2.25 billion in new shares to plug the hole in its finances.\n\n"textdocument41

���E(	M33�]fced2b349f04b87752db89f49b4122982023-03-22 14:27:492023-03-22 14:27:49"That set off panic among customers, who withdrew their money in large numbers.\n\nThe bank\u2019s stock plummeted 60% Thursday and dragged other bank shares down with it as investors began to fear a repeat of the global financial crisis a decade and a half ago.\n\nBy Friday morning, trading in SVB shares was halted and it had abandoned efforts to raise capital or find a buyer. California regulators intervened, shutting the bank down and placing it in receivership under the Federal Deposit Insurance Corporation, which typically means liquidating the bank\u2019s assets to pay back depositors and creditors.\n\nWhat about depositors and investors?\nUS regulators said Sunday that they would guarantee all SVB customers\u2019 deposits. The move is aimed at preventing more bank runs and helping tech companies to continue paying staff and funding their operations.\n\nSilicon Valley Bank headquarters in Santa Clara, California, US, on Thursday, March 9, 2023. SVB Financial Group bonds are plunging alongside its shares after the company moved to shore up capital after losses on its securities portfolio and a slowdown in funding. Photographer: David Paul Morris/Bloomberg via Getty Images\nUS regulators say SVB customers will be made whole as second bank fails\nThe intervention does not amount to a 2008-style bailout, however, which means investors in the company\u2019s stock and bonds will not be protected.\n\n\u201cLet me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out \u2026 and the reforms that have been put in place mean that we\u2019re not going to do that again,\u201d Treasury Secretary Janet Yellen told CBS in an interview Sunday.\n\n\u201cBut we are concerned about depositors and are focused on trying to meet their needs.\u201d\n\nWill this trigger a banking crisis?\nThere are already some signs of stress at other banks. Trading in First Republic Bank (FRC) and PacWest Bancorp (PACW) was temporarily halted Monday after the shares plunged 65% and 52% respectively. Charles Schwab (SCHW) stock was down 7% at 11.30 a.m. ET Monday.\n\nIn Europe, the benchmark Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, fell 5.6% in morning trade \u2014 notching its biggest fall since last March. Shares in embattled Swiss banking giant Credit Suisse were down 9%.\n\nSVB isn\u2019t the only financial institution whose investments into government bonds and other assets have fallen dramatically in value.\n\nAt the end of 2022, US banks were sitting on $620 billion in unrealized losses \u2014 assets that have decreased in price but haven\u2019t been sold yet, according to the FDIC.\n\nIn a sign that regulators have concerns about wider financial chaos, the Fed said Sunday that it would make additional funding available for eligible financial institutions to prevent the next SVB from collapsing.\n\nMost analysts point out that US and European banks have much stronger financial buffers now than during the global financial crisis. "textdocument49

�
���!)	K33�4ddacfb13fcd982113180159072e6e12023-03-22 14:27:492023-03-22 14:27:49"They also highlight that SVB had very heavy exposure to the tech sector, which has been particularly hard hit by rising interest rates.\n\n\u201cWhile SVB is a major failure, [it] and other niche players like Signature are quite unique in the broader banking world,\u201d research analysts David Covey, Adrian Cighi and Jaimin Shah at M&G Investments commented in a blog post on Monday. \u201cSo unique, in our view, that it is unlikely to create material problems for any of the large diversified banks in the US or Europe from a credit point of view.\u201d\n\nWhy did HSBC buy the UK business for \u00a31?\nHSBC stepped in Monday to buy SVB UK for \u00a31 ($1.2), securing the deposits of thousands of British tech companies that hold money at the lender.\n\nHad a buyer not been found, SVB UK would have been placed into insolvency by the Bank of England, leaving customers with only deposits worth up to \u00a385,000 ($100,000) \u2014 or \u00a3170,000 ($200,000) for joint accounts \u2014 guaranteed.\n\nHSBC's London headquarters, pictured here on 14th October 2022, has bought up SVB's UK arm\nThe HSBC rescue is \u201cfantastic news\u201d for the UK startup ecosystem, said Piotr Pisarz, the CEO of Uncapped, a financial tech startup that lends to other startups. \u201cI think we can all relax a bit today,\u201d he told CNN.\n\nIn a statement, HSBC CEO Noel Quinn said the acquisition \u201cstrengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life science sectors, in the UK and internationally.\u201d"textdocument9�c*	M33�2ad51c61a03338b49dbf02aee41a315d2023-03-22 14:27:492023-03-22 14:27:49"SVB Financial seeks bankruptcy protection for reorganization\n\nSVB Financial Group\nsaid on Friday it filed for a court-supervised reorganization under Chapter 11 bankruptcy protection to seek buyers for its assets, days after its former unit Silicon Valley Bank was taken over by U.S. regulators.\n\nThe move to commence bankruptcy proceedings comes as emergency measures to shore up confidence have so far failed to dispel worries about a financial contagion.\n\nShares of big U.S. banks fell between 1.5% and 2% in premarket trading on Friday.\n\nCalifornian regulators shuttered Silicon Valley Bank last Friday, making it the largest collapse since Washington Mutual went bust during the financial crisis of 2008.\n\nThe tech lender was forced to sell a portfolio of treasuries and mortgage-backed securities to Goldman Sachs at a $1.8 billion loss after a rise in yields eroded value.\n\nTo plug that hole, it attempted to raise $2.25 billion in common equity and preferred convertible stock but spooked clients pulled deposits from the bank that led to $42 billion of outflows in a day.\n\nEarlier this week, the defunct lender said it was planning to explore strategic alternatives for its businesses including the holding company, SVB Capital and SVB Securities.\n\nSVB Securities and SVB Capital\u2019s funds and general partner entities are not included in the Chapter 11 filing, the company said on Friday, adding it planned to proceed with the process to evaluate alternatives for the businesses, as well its other assets and investments.\n\nReuters reported on Wednesday that the parent company was exploring seeking bankruptcy protection for selling assets.\n\nThe company said on Friday it has about $2.2 billion of liquidity. It had $209 billion in assets at the end of last year."textdocument3

ll�+	M33�uf0903009aefa50271b9523e7c3d821712023-03-22 14:27:492023-03-22 14:27:49"Here\u2019s how the second-biggest bank collapse in U.S. history happened in just 48 hours\n\nKEY POINTS\nThe company\u2019s downward spiral began late Wednesday, when it surprised investors with news that it needed to raise $2.25 billion to shore up its balance sheet.\n\u201cThis was a hysteria-induced bank run caused by VCs,\u201d Ryan Falvey, a fintech investor of Restive Ventures, told CNBC.\nAll told, customers withdrew a staggering $42 billion of deposits by the end of Thursday, according to a California regulatory filing.\nNow, those who remained with SVB face an uncertain timeline for retrieving their money.\n\nOn Wednesday, Silicon Valley Bank\nwas a well-capitalized institution seeking to raise some funds.\n\nWithin 48 hours, a panic induced by the very venture capital community that SVB had served and nurtured ended the bank\u2019s 40-year-run.\n\nRegulators shuttered SVB Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever. The company\u2019s downward spiral began late Wednesday, when it surprised investors with news that it needed to raise $2.25 billion to shore up its balance sheet. What followed was the rapid collapse of a highly-respected bank that had grown alongside its technology clients.\n\nEven now, as the dust begins to settle on the second bank wind-down announced this week, members of the VC community are lamenting the role that other investors played in SVB\u2019s demise.\n\n\u201cThis was a hysteria-induced bank run caused by VCs,\u201d Ryan Falvey, a fintech investor at Restive Ventures, told CNBC. \u201cThis is going to go down as one of the ultimate cases of an industry cutting its nose off to spite its face.\u201d\n\nThe episode is the latest fallout from the Federal Reserve\u2019s actions to stem inflation with its most aggressive rate hiking campaign in four decades. The ramifications could be far-reaching, with concerns that startups may be unable to pay employees in coming days, venture investors may struggle to raise funds, and an already-battered sector could face a deeper malaise.\n\nThe roots of SVB\u2019s collapse stem from dislocations spurred by higher rates. As startup clients withdrew deposits to keep their companies afloat in a chilly environment for IPOs and private fundraising, SVB found itself short on capital. It had been forced to sell all of its available-for-sale bonds at a $1.8 billion loss, the bank said late Wednesday.\n\nThe sudden need for fresh capital, coming on the heels of the collapse of crypto-focused Silvergate bank, sparked another wave of deposit withdrawals Thursday as VCs instructed their portfolio companies to move funds, according to people with knowledge of the matter. The concern: a bank run at SVB could pose an existential threat to startups who couldn\u2019t tap their deposits.\n\nSVB customers said CEO Greg Becker didn\u2019t instill confidence when he urged them to \u201cstay calm\u201d during a call that began Thursday afternoon. The stock\u2019s collapse continued unabated, reaching 60% by the end of regular trading. "textdocument45

�w,	M33�Ac579ea7020cea12abfbcdf97a44049a22023-03-22 14:27:492023-03-22 14:27:49"Importantly, Becker couldn\u2019t assure listeners that the capital raise would be the bank\u2019s last, said a person on the call.\n\nDeath blow\nAll told, customers withdrew a staggering $42 billion of deposits by the end of Thursday, according to a California regulatory filing.\n\nBy the close of business that day, SVB had a negative cash balance of $958 million, according to the filing, and failed to scrounge enough collateral from other sources, the regulator said.\n\nFalvey, a former SVB employee who launched his own fund in 2018, pointed to the highly interconnected nature of the tech investing community as a key reason for the bank\u2019s sudden demise.\n\nProminent funds including Union Square Ventures and Coatue Management blasted emails to their entire rosters of startups in recent days, instructing them to pull funds out of SVB on concerns of a bank run. Social media only heightened the panic, he noted.\n\n\u201cWhen you say, `Hey, get your deposits out, this thing is gonna fail,\u2032 that\u2019s like yelling fire in a crowded theater,\u201d Falvey said. \u201cIt\u2019s a self-fulfilling prophecy.\u201d\n\nAnother venture investor, TSVC partner Spencer Greene, also criticized investors who \u201cwere wrong on the facts\u201d about SVB\u2019s position.\n\n\u201cIt appears to me that there was no liquidity issue until a couple of VCs called it,\u201d Greene said. \u201cThey were irresponsible, and then it became self-fulfilling.\u201d\n\n\u2018Business as usual\u2019\nThursday evening, some SVB customers received emails assuring them that it was \u201cbusiness as usual\u201d at the bank.\n\n\u201cI\u2019m sure you\u2019ve been hearing some buzz about SVB in the markets today so wanted to reach out to provide some context,\u201d one SVB banker wrote to a client, according to a copy of the message obtained by CNBC.\n\n\u201cIt is business as usual at SVB,\u201d the banker wrote. \u201cUnderstandably there may be questions and I want to make myself available if you have any concerns.\u201d\n\nBy Friday, as shares of SVB continued to sink, the bank ditched efforts to sell shares, CNBC\u2019s David Faber reported. Instead, it was looking for a buyer, he reported. But the flight of deposits made the sale process harder, and that effort failed too, Faber said.\n\nFalvey, who started his career at Wells Fargo\nand consulted for a bank that was seized during the financial crisis, said that his analysis of SVB\u2019s mid-quarter update from Wednesday gave him confidence. The bank was well capitalized and could make all depositors whole, he said. He even counseled his portfolio companies to keep their funds at SVB as rumors swirled.\n\nNow, thanks to the bank run that ended in SVB\u2019s seizure, those who remained with SVB face an uncertain timeline for retrieving their money. While insured deposits are expected to be available as early as Monday, the lion\u2019s share of deposits held by SVB were uninsured, and it\u2019s unclear when they will be freed up.\n\n\u201cThe precipitous deposit withdrawal has caused the Bank to be incapable of paying its obligations as they come due,\u201d the California financial regulator stated. \u201cThe bank is now insolvent.\u201d"textdocument36
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���	-	M33�ee30c0c8f3d0448d90d980a7af7eea2052023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bank (SVB) was a state-chartered commercial bank headquartered in Santa Clara, California. It operated branches in California and Massachusetts and was the largest bank by deposits in Silicon Valley. The bank was part of SVB Financial Group, a publicly traded bank holding company that had offices in 13 other U.S. states and over a dozen international jurisdictions.\n\nSVB was a leading financial institution that catered to almost half of all venture-backed tech startups. However, due to a series of central bank-endorsed interest rate hikes in the face of global inflation, there was a run on its deposits, which ultimately led to its failure on March 10, 2023. In response, the California Department of Financial Protection and Innovation (DFPI), which was its regulator, seized the bank and placed it into the receivership under the Federal Deposit Insurance Corporation (FDIC). This marked the second-largest bank failure in U.S. history.\n\nOn March 12, 2023, a joint statement was issued by Secretary of the Treasury Janet Yellen, Federal Reserve Chairman Jerome Powell, and FDIC Chairman Martin Gruenberg, stating that all depositors at SVB would be fully protected and would have access to both insured and uninsured deposits starting the following Monday, March 13. The FDIC then established a newly-created successor called Silicon Valley Bridge Bank, N.A., which operated as a bridge bank and assumed ongoing business.\n\nFoundation and early growth\nSilicon Valley Bank was founded in 1983 by Wells Fargo executive Bill Biggerstaff and Stanford University professor Robert Medearis to focus on the needs of startup companies. The two former Bank of America managers and tennis buddies came up with the idea over a game of poker in Pajaro Dunes, California. They hired Roger V. Smith, who had previously headed a high-tech lending unit at Wells Fargo, to be the bank's first CEO and president. The bank launched on October 17, 1983, as a wholly owned subsidiary of Silicon Valley Bancshares (now SVB Financial Group). It lined up 100 initial investors, including NFL quarterback Jim Plunkett, and well-connected former U.S. Representative Pete McCloskey joined its board to give the bank credibility with the venture capital community. The bank's first office was located on North First Street in San Jose.\n\nWhen Silicon Valley Bank was founded, the banking industry did not have a good understanding of startup companies, particularly those that lacked revenue. The bank structured its loans with the understanding that startups do not earn revenue immediately, managing risk based on their business model. The bank connected customers to its extensive venture capital, law, and accounting firm network. Its main strategy was collecting deposits from businesses financed through venture capital. It then expanded into banking and financing venture capitalists, adding services to allow the bank to keep clients as they matured from their startup phase. "textdocument42

���d.	M33�3bfacd99f8a77404501eafc5e48664732023-03-22 14:27:492023-03-22 14:27:49"Initially, startup founders seeking loans from the bank had to pledge about half of their shares as collateral, but the rate later fell to about seven percent, reflecting a low failure rate and founders' tendency to pay off the loans to stay in control of the company. The bank covered losses by selling the shares to interested investors. Eventually, it became common for venture capital firms' term sheets to require startups to create a bank account at Silicon Valley Bank specifically. For its part, the bank prioritized startups that received funding from top-tier venture capital firms, such as Sequoia Capital, New Enterprise Associates, or Kleiner Perkins, as a way to reduce risk.\n\nDuring the 1980s, the bank grew with the local high-tech economy, achieving 21 consecutive quarters of profitability. It went from a loss of $39,000 in 1985 to a profit of $12.3 million in 1991. In 1986, SVB acquired National InterCity Bank of Santa Clara. It opened its first office on the East Coast in 1990, near Boston, to serve the Massachusetts Route 128 tech corridor.\n\nUnder Smith's leadership, the bank diversified into the high-risk real estate loan business, which amounted to 50% of its portfolio by the early 1990s. A slump in the California real estate market resulted in a $2.2 million loss for the bank in 1992, and by 1995 the portfolio percentage had fallen to 10%. In 1993, John C. Dean was appointed CEO, with Smith becoming Vice Chairman. The bank added a winery lending business in 1994.\n\nExpansion\nThe wave of computer technology startups during the dot-com bubble provided an influx of business for the bank, which was noted for its willingness to lend to venture-stage companies that were not yet profitable. Among its approximately 2,000 clients in 1995 were networking innovators Cisco Systems and Bay Networks. That year, the bank moved its headquarters from San Jose to Santa Clara. The holding company's stock price soared through the bubble but fell 50% when the bubble burst. The bank continued to add branches in technology hubs across the country. Ken Wilcox became CEO in 2000 and chose to continue the company's niche focus on technology companies rather than diversifying into a broader commercial bank.\n\nSVB formally entered the private banking business in 2002, building on prior experience and relationships with wealthy venture capitalists and entrepreneurs. In 2003, the bank sponsored three high-profile international trade missions to Bangalore and Mumbai, Tel Aviv, and Shanghai and Beijing, bringing along a delegation of two dozen Silicon Valley venture capitalists along to meet with local investors, entrepreneurs, and government officials, as a prelude to opening international offices. It announced an international expansion drive in 2004, with new operations in Bangalore, London, Beijing, and Israel.\n\nDuring the 2007\u20132008 financial crisis, SVB Financial Group received a $235 million investment from the federal government in exchange for preferred stock and warrants under the Troubled Asset Relief Program (TARP). "textdocument5

ff�/	M33�3bdd26933053cc29aea48b4d481f4a132023-03-22 14:27:492023-03-22 14:27:49"Over two years, it paid $10 million in dividends to the U.S. Treasury, then used the proceeds of a $300 million stock sale to buy back the government's interest. Greg Becker replaced Wilcox as CEO in April 2011.\n\nSVB partnered with Shanghai Pudong Development Bank (SPDB) in 2012 to create a separate Shanghai-based bank, SPD Silicon Valley Bank, to lend to local technology startups. The new bank, owned 50\u201350 by the two companies, received approval from Chinese bank regulators to operate in renminbi (RMB), making it one of a handful of American-owned banks permitted to do so. SVB also managed two local yuan-denominated funds for Shanghai's Yangpu District government, and invested in a Hangzhou-based loan guarantee company.\n\nIn 2015, the bank stated that it served 65% of all U.S. startups. Its new offerings at the time included syndicated loans and foreign currency management, and it stood out as the only U.S. financial institution then working with virtual currency startups. SVB was the finance partner during the launch of Stripe's Atlas platform in February 2016 to help startups register as U.S. corporations.\n\nSVB's involvement in financing acquisitions for startups gave it insider information regarding such acquisitions, and in June 2021 Mounir Gad, a former senior vice president and director at the bank, pleaded guilty to violating insider trading laws in 2015 and 2016 when he tipped off a friend about three startup acquisitions.\n\nOperations in the final years\nBusiness model\nThe bank's customers were primarily businesses and people in the technology, life science, healthcare, private equity, venture capital and premium wine industries. It was influential among startups in India, being unusually willing to serve C corporations whose founders lacked Social Security numbers. Despite banking a high-tech sector, the bank was criticized for having old technology and lacking biometric authentication.\n\nIn December 31, 2022, 56% of its loan portfolio were loans to venture capital firms and private equity firms, secured by their limited partner commitments and used to make investments in private companies, 14% of its loans were mortgages to high-net-worth individuals, and 24% of its loans were to technology and health care companies, including 9% of all loans which were to early and growth-stage startup companies. Silicon Valley Bank required an exclusive relationship of those borrowing from the bank. In February 2023, Forbes listed the bank as #20 of \"America's Best Banks\" with a 13.8% return on equity. In March 2023, Moody's Investors Service rated the bank's loan portfolio as conservative and high-performing. The bank's overseas subsidiaries held $13.9 billion in deposits.\n\nFacilities\nThe bank was primarily administered from its headquarters in Santa Clara, California and from an office in Tempe, Arizona. "textdocument4

�_0	M33�ca080b0b913433cf01b39df0c458bd0e2023-03-22 14:27:492023-03-22 14:27:49"The bank's parent, SVB Financial Group, launched sister subsidiaries to SVB which operated investment banking and private banking services from offices in Canada (Toronto), the Cayman Islands (Grand Cayman), China (Beijing, Shanghai, Shenzhen), Hong Kong, India (Bangalore), Ireland, Israel (Tel Aviv), Sweden (Stockholm), Denmark (Copenhagen), Germany (Frankfurt) and other countries of the European Union and commercial banking services from an office in the United Kingdom (London).\n\nThe bank's 160,000-square-foot (15,000 m2) headquarters in Santa Clara, which still serves as headquarters for the holding company, has been the longtime anchor tenant of a seven-building office complex called The Quad at Tasman. The bank's lease was scheduled to expire on September 30, 2024. The bank also operated 17 other branch locations in California and Massachusetts and the holding company operated from a total of 55 offices across the U.S.\n\nAffiliations and community involvement\nSilicon Valley Bank was a member of the Federal Reserve System, with the bank's CEO serving as a class A member of the Federal Reserve Bank of San Francisco Board of Directors. It was also a member of several trade associations: TechNet, the Silicon Valley Leadership Group, the Bay Area Council, Tech:NYC, the Mid-Size Bank Coalition of America, and the American Bankers Association. As part of its foray into India, it partnered with the non-profit mentoring organization TiE beginning in the late 1990s.\n\nThe bank founded the nonprofit Silicon Valley Bank Foundation in 1995 to operate its corporate citizenship programs. The foundation was funded entirely through the bank, receiving contributions totaling $100,000 in 1998. The bank sponsored EF Education\u2013Tibco\u2013SVB, a women's professional cycling team, beginning in 2007, becoming a co-title sponsor in 2015.\n\nSince 2002, the bank made more than $2 billion in loans and investments to developers, including $1.6 billion in loans since 2014, to build affordable housing in Silicon Valley and San Francisco, as well as Massachusetts (from its 2021 acquisition of Boston Private). As a legacy of its Boston Private acquisition, it provided free banking services to many nonprofit organizations in San Mateo County, California.\n\nCollapse\nThe FDIC briefly created a new bank, the Deposit Insurance National Bank of Santa Clara, for the purpose of servicing SVB's insured deposits, before replacing it with a bridge bank.\nIn 2022, SVB began to incur steep losses following increased interest rates and a major downturn in growth in the tech industry, with the bank heavily concentrated in long-term Treasury bonds. As of December 31, 2022, SVB had mark-to-market accounting unrealized losses in excess of $15 billion for securities held to maturity. In early March of 2023, a combination of factors \u2013 including poor risk management and a bank run driven by tech industry investors \u2013 caused the bank to collapse. Use of social media was reported to be a factor in both the initial bank run and its aftermath, with those affected by the potential loss of deposits calling for regulators to ensure that uninsured accounts were made whole.\n\n"textdocument37109�3

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���'1	M33�!6f234199a2e1a3125455356ef74c7e952023-03-22 14:27:492023-03-22 14:27:49"Early in the morning of March 10, examiners from the Federal Reserve and the FDIC arrived at the offices of SVB to assess the company's finances. Several hours later, the California Department of Financial Protection and Innovation (DFPI) issued an order taking possession of SVB, citing inadequate liquidity and insolvency, and appointed the FDIC as receiver. The FDIC then established a deposit insurance national bank, the Deposit Insurance National Bank of Santa Clara, to re-open the bank's branches the following Monday and enable access to insured deposits. The CEO of Silicon Valley Bank, Greg Becker, was previously on the board of directors at the Federal Reserve Bank of San Francisco, but exited that position. An initial auction of Silicon Valley Bank assets on March 12 attracted a single bid from an undisclosed suitor, after PNC Financial Services and RBC Bank backed away from making offers. The FDIC rejected this offer and plans to hold a second auction to attract bids from major banks, now that the bank's systemic risk designation allows the FDIC to insure all deposits.\n\nOn March 13, 2023, the FDIC announced via press release, that the FDIC transferred SVB assets to a new bridge bank, Silicon Valley Bridge Bank, N.A., and appointed Tim Mayopoulos as CEO. The new entity, Silicon Valley Bridge Bank, N.A., is an FDIC-operated, and all SVB clients will become customers of new bridge bank. The FDIC stated the goal is to provide a new level of protection to SVB clients, including keeping regular banking hours and expected banking activities, like online banking, ATM acess to client funds, and check writing, and the FDIC stated SVB\u2019s official checks will clear and that loan customers should continue making payments. The FDIC also added that their role is to not protect Sillicon Valley Bank shareholders and certain unsecured debt holders.\n\nRegulatory filings from December 2022 estimated that more than 85% of deposits were uninsured. The failure of SVB was the largest of any bank since the 2007\u20132008 financial crisis by assets, and the second-largest in U.S. history behind that of Washington Mutual. SVB's Chinese joint venture, whose chairman is the chairman of Shanghai Pudong Development Bank, said their operations were \"sound\" as of March 11, 2023. The UK government announced that it was working on a lifeline for British tech firms affected by the collapse of the Bank and its branch in the United Kingdom as a part of the fallout from the parent bank. 3,000 firms in the UK were believed to be at risk of bankruptcy without a rescue. On March 13, 2023, after a bidding process, it was announced that HSBC UK had agreed to acquire Silicon Valley Bank UK for \u00a31 in a rescue deal, at no cost to the taxpayer and with depositors fully protected.\n\nOn March 17, 2023, Silicon Valley Bank's former parent company, SVB Financial Group, filed for Chapter 11 bankruptcy. The bankruptcy did not include its remaining subsidiaries, SVB Capital and SVB Securities. "textdocument15�k2	K33�-104ed3c093253880bbcc7683bcd59ff2023-03-22 14:27:492023-03-22 14:27:49"Silicon Valley Bridge Bank or SVB Private is also not part of the bankruptcy filing as they are no longer affiliated with SVB Financial Group."textdocument0