The new CEO of SVB Tim Mayopoulos has had a lot to say in the 24 hours since he joined the bank on Monday. In a private Zoom meeting hosted by SVB for a select number of LPs and investors, he asked clients to return deposits to the institution: “That’s the most important thing you can do to ensure Silicon Valley Bank survives.”
Mayopoulos, a former CEO and executive of Fannie Mae, said the bank’s future is still being charted, but added that depositors’ actions will affect these decisions. He said the options for the next incarnation of SVB Bridge Bank, its new name, are for it to partner with another financial institution or other investors, or for it to go into liquidation.
“That’s not the preferred course here; [the preferred] is to allow Silicon Valley Bank to continue to operate as an independent institution with a new charter under the Silicon Valley Bridge bank or to become part of another organization, or [that a] set of sponsors will be able to provide the capital and financing for the business in the future.”
The new executive also requested new deposits and said that both existing and new deposits will be protected by the FDIC. A senior financial analyst speaking on the call also said they are processing “large volumes” of new loans as we speak.
“There is no safer place in the United States, nor is there any bank in the United States, for deposits,” Mayopolous said, adding that the newly formed bridge bank “is not even subject to the typical legal limit of $250,000 on the account.” . He is referring to the Federal Reserve’s joint statement on Sunday that clarified that SVB depositors, both insured and uninsured, will be helped in a way that will “fully protect” all the capital they have locked up in the bank. “This is not something risky that we are asking you to do,” Mayopoulos said during the call. “The United States government has made it clear and unequivocal that all deposits at this institution are guaranteed, so if for any reason the institution is unable to pay those deposits, the Federal Deposit Insurance Corporation will pay.”
Despite SVB saying it was up and running yesterday, things are still clearly in the works. SVB said on the call that it is still working to bring cross-border solutions, including international connections, back online. SVB credit lines are still active and existing lines will be honored. As for other services and business units that SVB had, from securities to risky debt, beyond protected arm deposits, the future operating model is still being assessed.
“We clearly see that a big part of the franchise value of the business is preserving all of those capabilities,” Mayopolous said. “It’s too early to tell… that’s very much on our minds.” There is no longer a relationship between SVB in the US and SVB in the UK, he confirmed.
Mayopolous said the institution’s future is still being charted, but called for “at least some of its money” to come back as part of the diversification strategy around where it keeps its cash and deposits.
During the call, Mayopolous also addressed the perception of SVB on social media early on: “We’re not in relaxation mode.” The meeting reiterates a note Mayopoulos sent to clients yesterday, in which he said the bank is conducting “business as usual” since the FDIC took over the deposits. He sent another email to customers this morning emphasizing the reopening.
“Trust is a very delicate thing: it takes a long time to build trust, and it’s very easy to lose trust quickly,” he said toward 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 last few days have really unsettled people and put them in really difficult positions. We’re no strangers to that…in everything we’re trying to do going forward, we’re trying to do everything we can to be clear and open with people about what’s happening and what’s not happening.”
More than 220 questions were asked during the meeting, and SVB said that they will generate FAQs from them. SVB has a series of calls planned this week, some for venture capitalists and some for founding clients and business owners.
How are you reacting to the collapse of SVB? What are you telling your co-workers, portfolio companies, founders and investors? For advice and ideas, you can contact Natasha Mascarenhas on Twitter @nmasc_ or on Signal at +1 925 271 0912. Her email is [email protected] Requests for anonymity will be respected.
