Silicon Valley Bank’s new CEO urges clients to return deposits

Image Credits: TechCrunch

SVB’s new CEO Tim Mayopoulos has had a lot to say in the 24 hours since joining the bank on Monday. In a private Zoom meeting the SVB hosted for a select few LPs and investors, he asked clients to return deposits to the institutions: “That’s the single most important thing you can do to make sure Silicon Valley Bank survives.”

Mayopoulos, the former CEO and executive at Fannie Mae, said the bank’s future is still being mapped out, but added that depositors’ actions will influence these decisions. He said options for the next incarnation of SVB Bridge Bank, the new name, are that it would partner with another financial institution or other investors, or that it could be liquidated.

“That is not the preferred direction here; [the preferred] is to either allow Silicon Valley Bank to continue operating as an independent institution with a new charter under the Silicon Valley Bridge bank or to be part of another organization, or [that a] a range of lenders will be able to provide the capital and financing for the company going forward.

The new director also asked for new deposits and said that both existing and new deposits will be protected by the FDIC. A senior financial analyst who also spoke on the call said they are currently processing “large volumes” of new loans.

“There is no safer place in the United States, or any bank in the United States, for deposits,” Mayopolous said, adding that the newly formed bridge bank “isn’t even subject to the $250,000 typical legal limit of the account.” He is referring to the Federal Reserve’s joint statement on Sunday, which clarified that SVB depositors, both insured and uninsured, will receive assistance in a way that will “fully protect all the capital they have locked up in the bank.” “. “This is not a risky business that we’re asking you to do,” Mayopoulos said during the phone call. “The United States government has made it clear and unequivocal that all deposits with this institution are guaranteed, so if for some reason the institution is unable to pay those deposits, the Federal Deposit Insurance Corporation will pay.”

Despite SVB saying it was ready and fully operational yesterday, things are still clearly in the works. SVB said during the call that it is still working to get cross-border solutions, including international wires, back online. SVB credit facilities are still active and existing facilities are being honoured. As for other services and business units that SVB had – from securities to venture capital – besides the protected arm deposits, the future business model is still being evaluated.

“We clearly see that a big part of the company’s franchise value is the preservation of all those capabilities,” Mayopolous said. “It’s too early for me to say… we’re thinking about that a lot.” A relationship between SVB in the US and SVB UK no longer exists, he confirmed.

Mayopolous said the institution’s future is still being mapped out, but asked to return “at least some of your money” as part of the diversification strategy around where you keep your money and your deposits.

During the conversation, Mayopolous also addressed social media’s perception of SVB early on: “We’re not in phasing-out mode.” The meeting echoes a note Mayopoulos sent to clients yesterday in which he said the bank has been doing “business as usual” since the FDIC took over deposits. He sent another email to customers this morning highlighting the reopening.

“Trust is a very delicate thing — it takes a very long time to build trust and it’s very easy to lose trust quickly,” he said towards the end of the nearly hour-long conversation. “What we know here is that we cannot take the trust of our customers for granted. The events of the past few days have really upset people and put people in some really tough positions. We’re not aware of that… in everything we try to do going forward, we try to do our very best to be clear and open with people about what is happening and what isn’t happening.”

More than 220 questions were asked during the meeting and the SVB said they will generate an FAQ from it. SVB has scheduled a series of calls this week, some for VCs and others for founder and entrepreneur clients.

How do you react to the bankruptcy of the SVB? What do you tell your colleagues, portfolio companies, founders and investors? For tips and thoughts, reach out to Natasha Mascarenhas on Twitter @nmasc_ or on Signal at +1 925 271 0912. Her email is Anonymity requests are respected.






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