Silicon Valley Bank branch calls NYPD on tech investors after they tried to ... trends now
A Silicon Valley Bank branch in Manhattan today called the NYPD on tech investors attempting to pull their cash out after the firm was seized by regulators.
Police were called after 'about a dozen' financiers, including former Lyft executive Dor Levi, showed up outside the building on Park Avenue as a run on the bank Friday morning forced the Federal Deposit Insurance Corporation to shut it down. SVB blocked them from entering and two cop cars arrived to secure the building.
The bank collapsed today as depositors - mostly technology workers and venture capital-backed companies - began withdrawing their money following a shock announcement of a $1.8bn loss. The bank took a hammering in pre-market with its price plunging by 66 percent before trading was halted.
With around $209bn in assets, SVB is the second-largest bank failure in US history after the 2008 collapse of Washington Mutual. It is the first FDIC-insured bank to fail in more than two years, the last being Almena State Bank in October 2020.
Police were called after 'about a dozen' financiers, including former Lyft executive Dor Levi, showed up outside the building on Park Avenue as a run on the bank Friday morning forced the Federal Deposit Insurance Corporation to seize its assets. SVB blocked them from entering and two cop cars arrived to tell the investors to get out of the building.
Employees stand outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California
The Federal Deposit Insurance Corporation seized SVB's assets today as trading was halted after its shares tumbled 66 percent in premarket
Silicon Valley Bank had about $209 billion in total assets and about $175.4 billion in total deposits, as of December 31, 2022.
The main office and all branches of Silicon Valley Bank will reopen on March 13 and all insured depositors will have full access to their insured deposits no later than Monday morning, according to the statement.
The startup-focused lender has branches in California and Massachusetts, as well as a sole branch in NYC.
The collapse of SVB came less than 48 hours after the bank disclosed plans to raise over $2 billion from investors to counter $1.8 billion in losses from the sale of bonds, which were liquidated to cover declining deposits.
That announcement spurred a bank run, pushing the firm into failure as customers withdrew their deposits at a furious pace over fears it faced insolvency.
Following the shutdown, the FDIC said SVB depositors will have full access to their insured deposits no later than Monday morning. The federal agency insures each depositor to at least $250,000.
Depositors with funds above the insured amount will receive a dividend within the next week, and a receivership certificate for the remaining amount of their uninsured funds, to be paid off through the sale of the bank's assets.
Earlier on Friday, SVB halted trading of its shares pending the announcement, after they dropped as much as 64% in premarket trading following a plunge of about 60% in the previous session.
The bank on Friday morning was reportedly in discussions for a sale -- but word later emerged that a huge run on the bank's deposits had cast doubt on a bailout merger, according to a report from CNBC citing sources.
In a memo reported by Reuters, SVB Financial Group told its employees to work from home until further notice, stating: 'SVB is undergoing a series of conversations that have not been concluded yet to determine next steps for the company.'
On Thursday night, Founders Fund, the venture capital fund co-founded by Peter Thiel, advised startups to pull their money from Silicon Valley Bank amid concerns about its financial stability, according to Bloomberg.
On Wednesday, SVB CEO Greg Becker insisted in a letter to investors that the bank remained 'well-capitalized, with a high-quality, liquid balance sheet and peer-leading capital ratios'
On Thursday night, Founders Fund, the venture capital fund co-founded by Peter Thiel (above), advised companies to pull money from Silicon Valley Bank
Employees stand outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California
Employees stand outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara
People walk through the parking lot at the Silicon Valley Bank (SVB) headquarters in Santa Clara on Friday
Theil's warning, and a similar alert from startup incubator Y Combinator, increased fears that a run on SVB deposits could push the bank into insolvency, if it were unable to meet the demand for customer withdrawals.
It came after parent company SVB Financial Group announced a massive equity raise to cover a $1.8 billion loss on the sale of bonds, which the bank was forced to liquidate to cover a steep decline in deposits.
That plan failed to calm investors who worried whether the capital raise would be enough to cover the bank's rapidly dwindling deposits.
SVB said its deposits were dropping faster than it had expected due to increased spending by its clients, largely technology and healthcare startups, as new infusions of venture capital dry up amid rising interest rates.
In response, billionaire hedge funder Bill Ackman led calls for a government bailout for troubled SVB, saying the bank's implosion would harm the broader economy.
'The failure of SVB
