Silicon Valley Bank’s new CEO Tim Mayopoulos told clients that the lender is open and conducting business as usual.
The head of Silicon Valley Bridge Bank, created by US regulators to succeed Silicon Valley Bank after it collapsed, urged fleeing depositors to return with their money, as large banks see an influx of funds.
“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base,” Mayopoulos said in a statement, “both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days, ” news agency AFP reported.
He added, “We are doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy.”
Also Read: Silicon Valley Bank: A Bank Goes Kaput
“We are making new loans and fully honoring existing credit facilities,” Mayopoulos said.
SVB, as Silicon Valley Bank is known, had a massive share of its assets – 55% – invested in fixed-income securities, such as U.S. government bonds.
Customers of SVB were withdrawing their deposits beyond what it could pay using its cash reserves, and so to help meet its obligations the bank decided to sell $21 billion of its securities portfolio at a loss of $1.8 billion. The drain on equity capital led the lender to try to raise over $2 billion in new capital.
The U.S. Federal Deposit Insurance Corporation had tapped former Fannie Mae head Mayopoulos as CEO of the newly created entity, named Silicon Valley Bank N.A, after the regulator took control of SVB following its collapse that crippled stocks and triggered concerns of a contagion throughout global markets.
The regulator transferred all deposits of Silicon Valley Bank to this newly created bridge bank and had said all depositors will have access to their money beginning Monday morning.
In the letter to clients, Mayopoulos said that the bank will provide more information as soon as it is available.
“I look forward to getting to know the clients of Silicon Valley Bank…I also come to this role with experience in these kinds of situations. I was part of the new leadership team that joined Fannie Mae in the wake of the financial crisis in 2008-09, and I served as the CEO of Fannie Mae from 2012-18,” Mayopoulos added in the letter.
(With inputs from agencies)
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