SVB Financial Group, the parent company of Silicon Valley Bank, filed for bankruptcy on Friday before a Manhattan court, as announced in a statement. The move comes a week after the aforementioned bank was intervened by the financial authorities of the United States, in the biggest fall of an entity since the financial crisis of 2008. Taking advantage of the suspension of payments under judicial supervision will allow SVB Financial Group liquidate its non-bank assets.
Banks as such cannot declare suspension of payments, but are intervened by the FDIC, the deposit guarantee fund. The authorities have spent almost a week searching without success for a buyer for the entity as a whole or for its assets, by parts. There have been negotiations that have not crystallized. Biden has promised that the rescue of the entity will not imply losses for taxpayers.
The parent company can declare bankruptcy as it has done. In documents filed with the court, SVB Financial Group declares assets and liabilities of up to $10 billion. It has about $2.2 billion of liquidity, according to the statement. In addition, it had about $500 million in investment securities and $475 million in other assets as of December 31, according to regulatory filings. At the time, it had long-term debt of about $3.4 billion. Currently, as stated this Friday, the financed debt of the SVB Financial Group amounts to approximately 3,300 million dollars in principal of unsecured promissory notes. SVB Financial Group also has $3.7bn of preferred capital outstanding.
“SVB Financial Group intends to use the judicial process to evaluate strategic alternatives for SVB Capital, SVB Securities and other company assets and investments,” the company says. The process is being led by a five-member restructuring committee appointed by the board of directors. Centerview Partners LLC is assisting the restructuring committee with the selection process for strategic alternatives, which is already underway and has attracted significant interest, according to the company. Any process of sale of assets will be carried out through the procedure of Chapter 11, which regulates bankruptcies, and will be subject to judicial approval.
“The Chapter 11 process will allow SVB Financial Group to preserve value while evaluating strategic alternatives for its valued businesses and assets, especially SVB Capital and SVB Securities,” said William Kosturos, group restructuring director. Kosturos assures that the company will continue to work in cooperation with the entity that has succeeded Silicon Valley Bank: “We are committed to finding practical solutions to maximize recoverable value for the stakeholders of both entities.”
Santa Clara, California-based SVB is the biggest failed bank in more than a decade, with about $209 billion in total assets at the end of last year, according to the FDIC. It is also the second largest bank to fall under the agency’s receivership, behind only Washington Mutual, which imploded in 2008.
Concern in tech circles grew in March after Peter Thiel’s Founders Fund and other high-profile venture capital firms advised their portfolio companies to withdraw money from the bank. This advice came a day after the bank’s parent company announced it would try to raise more than $2 billion after posting major portfolio losses.
This Friday, the shares of First Republic Bank fell sharply again on the stock market despite the deposits of 30,000 million dollars that the big bank has agreed to inject to prevent a flight of deposits and a liquidity crisis in the 14th largest bank in United States by assets.
Follow all the information on Economy and Business on Facebook and Twitteror in our weekly newsletter
Five Days agenda
The most important economic appointments of the day, with the keys and the context to understand their scope.
RECEIPT IN TU CORREO
