SVB Financial Group also clarified that it is no longer affiliated with Silicon Valley Bank N.A. which is now operating under the jurisdiction of the Federal Deposit Insurance Corporation (FDIC) and is not included in the Chapter 11 filing.
SVB Financial Group announced that it had filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on March 17. The company stated that the move was to preserve value as it explores strategic alternatives for its businesses.
SVB Financial Group stressed that its venture capital arm, SVB Capital, and broker-dealer SVB Securities, as well as funds of general partner entities, are not included in the bankruptcy proceedings and will continue to operate in an ordinary manner.
SVB Financial Group also clarified that it is no longer affiliated with Silicon Valley Bank N.A. or the bank’s private banking and wealth management business, SVB Private. The bank’s successor, Silicon Valley Bridge Bank, N.A., is operating under the jurisdiction of the Federal Deposit Insurance Corporation (FDIC) and is not included in the Chapter 11 filing.
According to the company’s estimations, it has $2.2 billion of liquidity, in addition to cash and interests in SVB Capital and SVB Securities, and other valuable investment securities accounts and other assets for which it is exploring strategic options.
The funded debt of SVB Financial Group is about $3.3 billion in aggregate principal amount of unsecured notes, which are “only recourse to SVB Financial Group” and have no impact on SVB Capital or SVB Securities. The firm also has $3.7 billion of preferred stock.
William Kosturos, SVB Group chief restructuring officer, stated that the Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities. He emphasized that SVB Capital and SVB Securities will continue to operate and serve clients, led by their independent teams.
The ongoing SVB crisis has triggered a lot of uncertainty, not only in the traditional banking system but also in some cryptocurrency markets. Circle, the operator of the major stablecoin USD Coin (USDC), had $3.3 billion, or roughly 8% of its reserves, tied to SVB after the bank shut down operations on March 8. Due to the events, USDC briefly depegged, tumbling to $0.87 and subsequently repegging amid reports of SVB resolution.
On March 13, banking giant HSBC announced that its subsidiary, HSBC UK Bank, acquired Silicon Valley Bank UK for 1 British pound ($1.2). According to HSBC Group CEO Noel Quinn, the acquisition made “excellent strategic sense” for HSBC’s business in the United Kingdom, strengthening its commercial banking franchise.