Picture credits: Tech Crunch
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 organized by SVB for a select number of LPs and investors, he asked clients to return deposits to institutions: “It’s the most important thing you can do to ensure the survival of Silicon Valley Bank.”
Mayopoulos, the former CEO and executive of Fannie Mae, said the bank’s future is still being worked out, but added that the actions of depositors will impact those decisions. He said the options for the next incarnation of SVB Bridge Bank, its new name, are that it would team up with another financial institution or other investors, or it could be dissolved.
“It’s not the favorite course here; (preference) is either to allow Silicon Valley Bank to continue to operate as an independent institution with a new charter under Silicon Valley Bridge Bank or to be part of another organization, or (that a) together of backers will be able to provide the capital and financing for the business in the future.
The new executive also called for new filings, saying existing and new filings will be protected by the FDIC. A senior financial analyst who also spoke on the call also said they were processing “high volumes” of new loans as we speak.
“There is no safer place in the United States, or in any bank in the United States, for deposits,” Mayopolous said, adding that the new bridge bank is “not even subject to the typical legal account limit of $250,000″. He is referring to the Federal Reserve’s joint statement on Sunday which clarified that SVB depositors, insured and uninsured, will receive assistance in a way that will “fully protect” all the capital they have locked up in the bank. “It’s not a risky thing that we’re asking you to do,” Mayopoulos said on the call. “The United States government has clearly and unequivocally stated that all deposits with this institution are guaranteed, so if for some reason the institution cannot pay these deposits, the Federal Deposit Insurance Corporation will pay.”
Although SVB said they were up and running and fully operational yesterday, things are still clearly in progress. SVB said on the call that it is still working to bring cross-border solutions back online, including international cables. The SVB credit facilities are still active and existing facilities will be honored. As for the other services and business units that SVB had – from securities to venture debt – beyond protected arm deposits, the future operating model is still being evaluated.
“We clearly see that a lot of the franchise value of the business is preserving all of those capabilities,” Mayopolous said. “It’s too early for me to say…it’s really on our minds.” A relationship between SVB USA and SVB UK no longer exists, he confirmed.
Mayopolous said the institution’s future is still being worked out, but called for “at least some of your money” to come back as part of the diversification strategy around where you keep your money and your deposits.
During the call, Mayopolous also addressed social media’s perception of SVB early on, saying, “We’re not in slowdown mode.” The meeting reiterates a memo Mayopoulos sent to clients yesterday, in which he said the bank was “business as usual” since the FDIC resumed deposits. He sent another email to customers this morning insisting on reopening.
“Trust is a very tricky thing – it takes a long time to build trust, and it’s very easy to lose trust quickly,” he said towards the end of the nearly hour-long call. . “What we know here is that we cannot take our customers’ trust for granted. The events of the past few days have really unsettled people and put them in really difficult positions. We’re not oblivious to that…in everything we try to do going forward, we try to do our best to be clear and open with people about what’s happening and what’s not happening.
Over 220 questions were asked during the meeting, and SVB said they will generate an FAQ from these. SVB has scheduled a series of calls this week, some for VCs and others for Founder and Business Owner clients.
How do you react to the bankruptcy of SVB? What do you say to your colleagues, portfolio companies, founders and investors? For advice and thoughts, you can contact Natasha Mascarenhas on Twitter @nmasc_ or on Signal at +1 925 271 0912. Her email is email@example.com. Requests for anonymity will be respected.