Silicon Valley Bank to customers: Come back!Play
Days after Silicon Valley Bank’s collapse prompted customers to line up in order to get their money out, the California bank is asking them to come back.
“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days,” said Tim Mayopoulos, the bank’s new CEO, in a note posted on the company’s LinkedIn page.
Silicon Valley Bridge Bank, an entity created after the federal government took over the failing bank, has a new name and a new message. The bank is billing itself as a safe place to park funds and open lines of credit — now that “new and existing deposits are fully protected” by the Federal Deposit Insurance Corporation (FDIC).
The message is resonating with some customers. They include John Keane, the CEO of MindRhythm, a Boston-based medical technology company that makes devices to monitor and diagnose certain types of strokes.
Because federal regulators took over and guaranteed all customers’ deposits, Keane said he feels comfortable keeping some of his money with the bank for now. Still, he plans to take precautions in case of sudden collapses in the future.
“I do think you'll see more companies spreading their deposits over multiple banks to prevent situations like this,” Keane said. “A number of the companies that were with Silicon Valley Bank had large sums of money just with Silicon Valley Bank. And I think that practice will probably be modified in the future.”
The best case scenario, Keane added, would be for Silicon Valley Bridge Bank to be sold to a well-known buyer. That “would restore some confidence” in the bank, he said.
Keeping some customers — or luring them back after the rush to flee the bank — could help the effort to attract a buyer.
Although a sale has yet to emerge, Mike Troiano, an investor with G20 Ventures in Boston, said Silicon Valley Bridge Bank is “definitely the safest bank in the world — at least for the next year” because of the added guarantee from the federal government.
Troiano said this week has caused some “PTSD” in the startup community, but some customers may be willing to ride out the uncertainty at Silicon Valley Bridge Bank.
“I think most people are maintaining some kind of relationship with them and waiting to see what happens beyond the FDIC-insured period,” Troiano said.
Silicon Valley Bank has been an important resource for startups and nonprofits in Massachusetts, according to several current and former bank customers who spoke to WBUR.
“It felt like a bank that knew the risk you were taking and were in it with you,” said Fran Rogers, a Franklin-based entrepreneur and tech consultant, who’s been banking with Silicon Valley Bank. He said in addition to being more willing to take a chance on younger, riskier companies, the bank sponsored large networking events for startup founders. He hasn’t found the same services with other banks.
Hundreds of investors, including several in Massachusetts, have released a statement of support for Silicon Valley Bridge Bank, asking investment managers to keep their funds there.
“In the event that SVB were to be purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them,” reads the statement.
Not everyone is convinced. Jonathan Levine, co-founder of Boston-based Folia Materials, which makes sustainable paper products, said he's moving his money out of Silicon Valley Bridge Bank. He spent hours this week trying to make sure funds from his company's accounts made it to vendors that needed to be paid.
"In the end, businesses exist because people trust the business to go forward and do what it's going to do," Levine said. And unfortunately, some of his vendors now feel uneasy about relying on the bank.
According to Reuters, federal regulators have set a Friday deadline for parties interested in buying Silicon Valley Bridge Bank, and a second bank, Signature Bank, based in New York. The report said the FDIC prefers selling to traditional lenders, such as big banks, over private equity firms.
This segment aired on March 17, 2023.