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Silicon Valley Bank CEO Greg Baker. Luke McGregor/Bloomberg via Getty Images
U.S. regulators are looking for a buyer for the rest of SVB Financial Group, which is working to find a manager for its sprawling commercial-banking operations, wealth division, investment bank and fund manager.
A Silicon Valley bank was seized by regulators Friday after a run on deposits and a push to raise capital. The Federal Deposit Insurance Corporation aims to find buyers for the company’s various businesses in order to return as much customer money as possible.
Major banks can at least explore acquisitions given the size of SVB’s businesses and the attractive customer base of tech companies and their wealthy founders. The bank was wiped out by piling into bonds before rates rose and deposits took hold, but it had been posting profits every year before collapsing rapidly.
Still, the FDIC’s statement Friday doesn’t signal a quick selloff of the entire firm. The regulator said it will issue an advance dividend to uninsured depositors in the coming week, possibly as future payments are triggered by asset sales.
The bank held nearly $212 billion in assets at the end of the year, a figure that has since seen the firm sell assets and cash out deposits to raise cash. More than half of the bank’s assets were in its bond portfolio, a composition that would produce losses when prices rose but should be relatively easy to install.
The company had more than 8,500 employees as of December 31, according to its annual statement. With dozens of offices around the world, the firm operates in the US and Canada, as well as the UK, Europe, Asia and the Middle East. The Bank of England announced on Friday that it plans to declare its UK unit insolvent in a separate process.
Check out SVB’s operating rooms:
Silicon Valley Bank
SVB Commercial Bank has earned a reputation as a banker for private equity and venture capital firms in California specializing in technology and healthcare clients. It projects $3.4 billion in profits for 2022, while holding about $172 billion in deposits. Its $5.23 billion revenue was about 84% of the company’s total for 2022.
Most of the firm’s loans are to private equity and venture capital funds, with the exception of capital call lines of credit. Those lines allow VC firms to tap money to invest immediately in startups and then pay pension funds and other investors once they receive the money they’ve already put into their funds.
SVB guarantees
The investment bank serves firms in industries including software, digital infrastructure, fintech, medical devices and biopharma. It advised about $9 billion in M&A transactions last year, ranking 83rd globally, according to Bloomberg’s league tables. The class It had a loss of $95 million in 2022 on revenue of $508 million.
SVB Capital
The fund manager focuses primarily on venture capital investments and had $9.5 billion under management at the end of December. Its funds generate investment returns and management fees for SVB.
That segment suffered last year in a tough environment for technology investment, posting a pretax loss of $180 million, compared with gains in 2021 and 2020.
SVB Private
SVB’s smaller segment includes high-net-worth clients, which were acquired by revenue in 2021 from Boston Private Financial Holdings. The business had $17 billion in client assets, which would be a small increase for trillion-dollar giants.
The private bank and wealth manager offers typical products such as mortgages, lines of credit, and tax and fiduciary services. Loans such as vineyard development are also less common.
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