SVB Failure rattles Wall St. and the broader economy

Global Intel Hub — 3/10/2023 – NY, NY — Last week Silicon Valley Bank or “SVB” was a leading tech-centric bank that focused on startups, private equity, and cutting edge businesses.  Suddenly, seemingly out of no where, solvency rumors spread until they hit the press.  Within days, the bank collapsed.  Let’s take a look at some of the Friday night fall-out:

Bankrupt Crypto lender BlockFi has more than $200 Million at SVB, according to Bloomberg:

Funds are in money market account, aren’t FDIC-insured

SVB was seized by bank regulators after swift downfall

Bankrupt crypto lender BlockFi has about $227 million in an account maintained by failed lender Silicon Valley Bank, the Justice Department said in a court filing.

The funds are parked in a money market mutual fund, which isn’t insured by the Federal Deposit Insurance Corp., according to a March 10 filing, from an arm of the DOJ that monitors bankruptcy 

If your company uses Rippling to process payments, your workers are probably not getting paid:

Here’s a long line of deposits, courtesy of Zero Hedge research department (great job guys!) —

USDC – Crypto Stablecoin run by Circle – Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.
ROKU – Roku had 26% of its cash, $487 million with Silicon Valley Bank
BLOCKFI – BlockFi has $227 million in “unprotected” funds in Silicon Valley Bank, according to a bankruptcy document, and may be in violation of U.S. bankruptcy law.
RBLX – Roblox said 5% of its $3b cash and securities balance is held at SVB.
DNA – Gingko Bioworks: Only the cash balance of the company’s wholly-owned subsidiary Zymergen Inc. is held in deposit accounts at SVB, representing approximately $74M or 6% of the company’s cash and cash equivalents as of December 31, 2022
RKLB – RocketLab USA had about $38 million in its accounts with the bank, representing about 7.9% of the startup’s cash and equivalents
LC – Lending Club warned about potentially losing funds on deposit at SVB of $21 million, said amount isn’t material to its liquidity position or capital levels, and doesn’t pose a risk to the group’s business or operations.
PAYO – Payoneer: Of the company’s approximately $6.4B in total cash balances as of December 31, 2022, less than $20M is held at SVB
PTGX – Protagonist Therapeutics considers its exposure to any liquidity concern at SVB to be limited, given that cash held at SVB is approximately $13 million as of March 9, 2023.
ACHR – Archer Aviation entered into a $20 million loan with SVB in 2021, $10 million of which is due for repayment in 2023
COHU – Cohu announced that it has deposit accounts with SVB with an aggregate balance of approximately $12.3M, which is approximately 3.8% of the company’s total cash and investments.
IGMS – IMG Biosciences: ‘As of March 10, 2023, the Company holds less than $5.0 million in deposits at SVB. Therefore, the Company believes it does not have any material exposure to any liquidity concerns at SVB.’
RYTM – Rhythm Pharmaceuticals announced that it has deposit accounts with SVB with an aggregate balance of approximately $3.4 million, which is approximately 1.1% of the Company’s total cash and cash equivalents.’
SYRS – Syros Pharmaceuticals discloses that, as of March 10, 2023, it has two deposit accounts at Silicon Valley Bank. One of these accounts has a balance of less than $250,000, and the other has a balance of approximately $3.1 million pursuant to a letter of credit that the Company was required to provide to its landlord in connection with the execution of the lease for its corporate headquarters…
EYPT – EyePoint Pharmaceuticals currently maintains a de minimis amount of cash, in the single digit millions of U.S. dollars, with Silicon Valley Bank (SIVB)
ATRA – Atara Biotherapeutics currently maintains an account at Silicon Valley Bank (“SVB”) holding cash deposits of approximately $2 million, which amount the Company considers to be immaterial to its liquidity.’
ISEE – Iveric Bio currently maintains a de minimis amount of cash and cash equivalents, in the low single digit millions of U.S. dollars, with Silicon Valley Bank (“SVe”).’
VERA – Vera Therapeutics currently holds approximately 1.2% of its cash and investments with SVB. Accordingly, the Company considers its risk exposure relating to SVB to be minimal.
XFOR – X4 Pharmaceuticals had approximately 2.5% of its cash deposits with SVB.
CTMX – CytomX Therapeutics does not consider its exposure to any liquidity concern at SVB to be significant. The cash held at SVB in CytomX’s operating CTMX account is at or near the FDIC-insured limit of $250,000. CytomX also
maintains a deposit account at SVB under a standby letter of credit issued pursuant to its office lease for approximately $917,000.’
AXSM – Axsome Therapeutics has material cash deposits with SVB.
WVE – Wave Life Sciences aggregate amount of the company’s cash and restricted cash held at SVB is approximately $1.5M.
JNPR – Juniper Networks maintains operating accounts at SVB with a minimal cash balance of less than 1% of the company’s total cash
QS – QuantumScape has very limited exposure to SVB, with only a low single digit percentage exposure relative to both the Company’s total liquidity and total assets.

In ‘unrelated’ news, Wells Fargo is experiencing a ‘technical issue’ causing ‘missing deposits’ –

A “technical issue” was causing some Wells Fargo customers to see missing deposits in their accounts, the bank said Friday.

In response to complains on Twitter, Wells Fargo representatives said that the issue may be leading customers to see incorrect balances or missing transactions but that their accounts “continue to be secure.” Wells Fargo said in a statement on Friday afternoon that it was aware that some customers’ direct deposit transactions “are not showing on their accounts.”

.. and of course, the CEO sold $3.5 Million in stock in the weeks prior to the bank’s collapse:

CEO Allegedly Sold $3.5 Million in Stock in Last Two Weeks

$42 Billion was withdrawn ‘within hours’ –

For those who slept through yesterday, here is what you missed and why the US banking system is suffering its worst crisis since 2020. Silicon Valley Bank, aka SIVB, the 18th largest bank in the US with $212 billion in assets of which $120 billion are securities (of which most or $57.7BN are Held to Maturity (HTM) Mortgage Backed Securities and another $10.5BN are CMO, while $26BN are Available for Sale, more on that later )…

… funded by over $173 billion in deposits (of which $151.5 billion are uninsured), has long been viewed as the bank at the heart of the US startup industry due to its singular focus on venture-capital firms. In many ways it echoes the issues we saw at Silvergate, which banked crypto firms almost exclusively.

It seems as the real pandemic is a financial one, with knock-on ripple effects quickly reverberating around the world.

Stay tuned on Zero Hedge for a fair and balanced, objective reporting of the facts.

If you want to trade the chaos in the markets – try Futures & Currencies @ Inc.

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