Parent Company Of Silicon Valley Bank Explores Bankruptcy

SVB Financial Group, now-defunct parent company Silicon Valley BankAccording to a Wednesday report,, is contemplating bankruptcy as a way to sell other assets. Report Source: Reuters

Silicon Valley Bank, one the largest American financial institutions, went bankrupt last week. Rushed They were allowed to withdraw their funds. Before the Federal Deposit Insurance Corporation took control, the firm had lost assets from a portfolio that contained long-term corporate and government bonds. This was to provide depositors with funds.

Sources close to the situation told Reuters that SVB Financial Group may seek bankruptcy protections in order to sell SVB Securities, an Investment Bank subsidiary, and SVB Capital an Investment Management and Venture Capital subsidiary. Silicon Valley Bank, a commercial banking entity, was the previous main business unit.

Executives are trying to find buyers for the remaining assets, or to focus a restructuring deal on the venture capital fund and investment bank. SVB Financial Group may also be able to find new investors to help fund the company. This is despite not having mentioned bankruptcy in any previous announcements about recovery mechanisms after the Silicon Valley Bank collapse.

According to another report, the FDIC will hire Piper Sandler, an investment banker to manage the auction of Silicon Valley Bank. Report Reuters: The government-backed company failed on Sunday to sell the firm.

Silicon Valley Bank’s deposits exceeded $250,000, and it provided services for nearly half the US venture-backed technology companies. Silicon Valley Bank’s deposits were guaranteed by regulators so that the rest of the financial system (in which approximately half of deposits exceed $250,000) would be protected.

Janet Yellen (Treasury Secretary), Jerome Powell, Federal Reserve Chair and Martin Gruenberg, Chairman of FDIC, spoke in a joint Statement Sunday, the banking system “remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry.” They promised that “no losses” Silicon Valley Bank’s collapse would also be a result of its failure. “borne by the taxpayer.”

In New York, Signature Bank was also closed by the FDIC over the weekend. This raises concerns about the sector’s resilience. Banks usually invest large amounts of their deposits. This means that they are unable to return all assets of customers if they request the funds in large quantities. Silicon Valley Bank sold a bond portfolio that had suffered from rising interest rates due to Federal Reserve actions to combat inflation.

President Joe Biden likewise On Monday, the bank system was confident and the assertion that the “quick action” His administration stabilized the financial crisis. “Your deposits will be there when you need them. Small businesses across the country that deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills,” He stated this in a Statement. “And their hardworking employees can breathe easier as well.”

The federal government will not protect entities holding shares in Silicon Valley Bank. “They knowingly took a risk and when the risk didn’t pay off, investors lose their money,” Biden added. “That’s how capitalism works.”

“From Bankruptcy Investigations by Silicon Valley Bank’s Parent Company“

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