Silicon Valley Bank’s parent seeks bankruptcy protection

Customers and bystanders queue outside a branch of Silicon Valley Bank on Monday, March 13, 2023 in Wellesley, Massachusetts.

Customers and bystanders queue outside a branch of Silicon Valley Bank on Monday, March 13, 2023 in Wellesley, Massachusetts. , Photo Credit: AP

The parent of the Silicon Valley bank seized by the US last week is filing for Chapter 11 bankruptcy protection.

SVB Financial Group, along with its CEO and its chief financial officer, was this week targeted in a class action lawsuit that claimed the company did not disclose the risks that future interest rate hikes could pose to its business. But will fall

SVB Financial Group is no longer affiliated with Silicon Valley Bank following its seizure by the Federal Deposit Insurance Corporation. Its collapse was the second largest bank failure in US history after the demise of Washington Mutual in 2008.

The bank’s successor, Silicon Valley Bridge Bank, continues to be operated under the jurisdiction of the FDIC and is not included in the Chapter 11 filing.

Also Read: Explained | What were the reasons for the failure of Silicon Valley Bank?

“The Chapter 11 process will allow SVB Financial Group to preserve value as it continues to make strategic adjustments to its prized businesses and assets, particularly SVB Capital and SVB Securities,” William Kostouros, SVB Financial Group’s chief restructuring officer, said in a statement Friday. evaluates options.” ,

Regulated broker-dealer SVB Securities and Venture Capital’s fund and private credit fund platform SVB Capital and its general partner entities are not involved in the Chapter 11 filing and continue to operate as normal.

The debt unsecured notes financed for SVB Financial Group totaled approximately $3.3 billion in principal amount. There is no claim against SVB Capital or SVB Securities. SVB Financial Group has $3.7 billion of preferred equity outstanding.

SVB Financial Group believes it has liquidity of approximately $2.2 billion. The Santa Clara, California-based company said it also has other valuable investment securities accounts and other assets for which it is exploring strategic alternatives.

Read also: Explained | What’s next for Silicon Valley Bank?

The shuttering of Silicon Valley Bank last Friday and New York-based Signature Bank two days later has brought back dark memories of the financial crisis that plunged the United States into the Great Recession of 2007-2009.

Determined to restore public confidence in the banking system over the weekend, the federal government protected all bank deposits, even those that exceeded the FDIC’s limit of $250,000 per individual account.


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