March 13, 2023 Latest on the Silicon Valley Bank collapse

By Mark Thompson, Aditi Sangal and Elise Hammond, CNN

Updated 3:07 AM ET, Tue March 14, 2023
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7:19 a.m. ET, March 13, 2023

Here's how Silicon Valley Bank collapsed in 48 hours

From CNN's Ramishah Maruf and Allison Morrow

A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank headquarters on March 10 in Santa Clara, California.
A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank headquarters on March 10 in Santa Clara, California. (Justin Sullivan/Getty Images)

Silicon Valley Bank, the go-to bank for US tech startups, facing a sudden bank run and capital crisis, collapsed Friday morning, leaving its high-powered customers and investors in limbo. It was taken over by federal regulators.

It was the largest failure of a US bank since Washington Mutual in 2008. Here’s what we know about the bank’s downfall.

What is SVB?

Founded in 1983, SVB specialized in banking for tech startups. It provided financing for almost half of US venture-backed technology and health care companies. While relatively unknown outside of Silicon Valley, SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC.

Why did it fail?

The Federal Reserve began aggressively raising interest rates a year ago to tame inflation. Higher borrowing costs sapped the momentum of tech stocks that had benefited SVB and eroded the value of long-term bonds that SVB and other banks gobbled up during the era of ultra-low, near-zero interest rates.

SVB’s $21 billion bond portfolio was yielding an average of 1.79% — the current 10-year Treasury yield is about 3.9%.

At the same time, venture capital began drying up, forcing startups to draw down funds held by SVB. So the bank was sitting on a mountain of unrealized losses in bonds just as the pace of customer withdrawals was escalating.

Then there was panic

On Wednesday, SVB announced it had sold a bunch of securities at a loss, and that it would also sell $2.25 billion in new shares to shore up its balance sheet. That triggered a panic among key venture capital firms, who reportedly advised companies to withdraw their money from the bank.

The bank’s stock began plummeting Thursday morning and by the afternoon it was dragging other bank shares down with it as investors began to fear a repeat of the 2007-2008 financial crisis.

By Friday morning, trading in SVB shares was halted and it had abandoned efforts to quickly raise capital or find a buyer. California regulators intervened, shutting the bank down and placing it in receivership under the Federal Deposit Insurance Corporation.

6:08 a.m. ET, March 13, 2023

HSBC buys Silicon Valley Bank’s UK business, ending "nightmare" for British tech

From CNN's Michelle Toh, Rob North and Olesya Dmitracova

HSBC has scooped up the UK arm of failed Silicon Valley Bank, securing the future of thousands of British tech firms that hold money at the lender.

Had a buyer not been found, SVB UK would have been placed into insolvency by the Bank of England following the stunning collapse of its parent in the United States.

In a statement, the central bank said it “can confirm that all depositors’ money with SVB UK is safe and secure as a result of this transaction.”

HSBC, Europe’s biggest bank, announced the £1 ($1.2) deal early Monday morning, saying it would be effective “immediately.”

The acquisition should “end the nightmare thousands of tech firms had been experiencing over the past few days,” Susannah Streeter, head of money and markets at investing platform Hargreaves Lansdown, said in a statement.

SVB UK is a major bank partner for Britain’s tech sector, and the failure of its parent sent tech executives scrambling to work out how to get their cash out to pay staff and cover operating expenses.

Read more here.