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Silicon Valley Bank staff offered 45 days of work at 1.5 times pay
Staff were told to continue working remotely.
Silicon Valley Bank imploded after depositors rushed to withdraw their deposits. (AP pic)
NEW YORK: Employees of Silicon Valley Bank were offered 45 days of employment at one and a half times their salary by the Federal Deposit Insurance Corp, the US regulator that took control of the collapsed lender on Friday, according to an email to staff seen by Reuters.
Workers will be enrolled and given information about benefits over the weekend by the FDIC, and healthcare details will be provided by the former parent company SVB Financial Group, the FDIC wrote in an email entitled “Employee Retention” late on Friday. SVB had a workforce of 8,528 at the end of last year.
Staff were told to continue working remotely, except for essential workers and branch employees.
The FDIC did not immediately respond to a request for comment.
Silicon Valley Bank imploded after depositors, concerned about the lender’s financial health, rushed to withdraw their deposits. The frenetic two-day run on the bank blindsided observers and stunned markets, wiping out more than US$100 billion in market value for US banks.
SVB ranked as the 16th biggest bank in the US at the end of last year, with about US$209 billion in assets and US$175.4 billion in deposits.
“Everyone is working with FDIC to stabilise the situation as quickly as possible,” California Governor Gavin Newsom said in a statement.
The lender’s main office in Santa Clara, California and its 17 branches in California and Massachusetts will reopen on Monday, the FDIC said in a statement on Friday.
SVB Securities, a broker-dealer owned by the bank’s former parent group, said on Saturday that its business would not be directly impacted by Silicon Valley Bank’s failure.
Some businesses with holdings at the failed bank are already receiving offers from hedge funds to buy their stranded deposits for as little as 60 cents on the dollar, Semafor, a news website, reported on Saturday, citing people familiar with the matter.
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NEW YORK: Employees of Silicon Valley Bank were offered 45 days of employment at one and a half times their salary by the Federal Deposit Insurance Corp, the US regulator that took control of the collapsed lender on Friday, according to an email to staff seen by Reuters.
Workers will be enrolled and given information about benefits over the weekend by the FDIC, and healthcare details will be provided by the former parent company SVB Financial Group, the FDIC wrote in an email entitled “Employee Retention” late on Friday. SVB had a workforce of 8,528 at the end of last year.
Staff were told to continue working remotely, except for essential workers and branch employees.
The FDIC did not immediately respond to a request for comment.
Silicon Valley Bank imploded after depositors, concerned about the lender’s financial health, rushed to withdraw their deposits. The frenetic two-day run on the bank blindsided observers and stunned markets, wiping out more than US$100 billion in market value for US banks.
SVB ranked as the 16th biggest bank in the US at the end of last year, with about US$209 billion in assets and US$175.4 billion in deposits.
“Everyone is working with FDIC to stabilise the situation as quickly as possible,” California Governor Gavin Newsom said in a statement.
The lender’s main office in Santa Clara, California and its 17 branches in California and Massachusetts will reopen on Monday, the FDIC said in a statement on Friday.
SVB Securities, a broker-dealer owned by the bank’s former parent group, said on Saturday that its business would not be directly impacted by Silicon Valley Bank’s failure.
Some businesses with holdings at the failed bank are already receiving offers from hedge funds to buy their stranded deposits for as little as 60 cents on the dollar, Semafor, a news website, reported on Saturday, citing people familiar with the matter.
***
SVB’s fallout spreads around the world from London to Singapore
The bank’s failure could wipe out startups around the globe.
The bank’s failure could wipe out startups around the globe.
Silicon Valley Bank’s sudden shutdown spells distress for businesses. (AP pic)
SANTA CLARA: The fallout from the collapse of Silicon Valley Bank is beginning to spread around the world.
Startup founders in California’s Bay Area are panicking about access to money and paying employees. Fears of contagion have reached Canada, India and China. In the UK, SVB’s unit is set to be declared insolvent, has already ceased trading and is no longer taking new customers. On Saturday, the leaders of roughly 180 tech companies sent a letter calling on UK chancellor Jeremy Hunt to intervene.
“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter seen by Bloomberg. “Many businesses will be sent into involuntary liquidation overnight.”
This is just the beginning. SVB had branches in China, Denmark, Germany, India, Israel and Sweden, too. Founders are warning that the bank’s failure could wipe out startups around the world without government intervention. SVB’s joint venture in China, SPD Silicon Valley Bank Co, was seeking to calm local clients overnight by reminding them that operations have been independent and stable.
“This crisis will start on Monday and so we call on you to prevent it now,” UK startup founders and chief executive officers said in the letter to Hunt. The companies listed in the letter include Uncapped, Apian, Pockit and Pivotal Earth.
Hunt spoke with the governor of the Bank of England about the situation on Saturday morning, and the economic secretary to the Treasury was holding a roundtable with affected firms later in the day, the Treasury said.
Underscoring the challenge governments face in getting a handle of the full extent of the fallout: The UK Treasury has begun canvassing startups, asking how much they have on deposit, their approximate cash burn and their access to banking facilities at SVB and beyond, two people familiar with the matter said, asking not to be identified because the information isn’t public. Treasury declined to comment on the survey.
Founders were anxiously awaiting the outcome of the roundtable and any information about how their deposits at the bank would be handled. Toby Mather, CEO of UK-based education software startup Lingumi, has 85% of his company’s cash in SVB. He tried to transfer some of his accounts, but as of Saturday evening, he wasn’t sure whether that worked. “This is life or death for us,” he said. “These things seemed so mundane before.”
Jack O’Meara, founder of the London genomics startup Ochre Bio, spent the weekend trying, unsuccessfully, to move deposits out of SVB. “If there is no intervention,” he said, “it could really wipe out a generation of entrepreneurial companies.”
As in the US, some SVB deposits in the UK are insured, but it was unclear when those funds would be available. A deeper concern among startup leaders is that the SVB collapse would throttle future funding from venture capital into the UK, where businesses are already hobbled by Brexit.
Asia’s tech leaders are scrambling to assess the potential ramifications too. In Singapore, financiers and entrepreneurs at a Wharton alumni gathering in the the Shangri-La shared news about the fallout, while startup founders and investors at a conference in Mumbai talked about nothing else.
“The impact of the SVB incident on the technology industry should not be underestimated,” analysts led by Liu Zhengning at China International Capital Corp. said in a note. Deposits are crucial for tech startups because they generally require a lot of cash to pay for hefty expenditures including research and development costs and staff salaries, they said.
“If these cash deposits finally have to be impaired in the process of bankruptcy or restructuring, some tech firms may face high cash flow tension,” they said. “The risks of bankruptcy should not be excluded.”
Back in Silicon Valley, US congressman Ro Khanna from Santa Clara held a town hall late Friday that was attended by more than 600 people including startup founders, tech leaders and SVB employees. It went on for more than 2.5 hours with the primary focus on small businesses trying to make payroll across the nation come Monday.
SVB customers in California, many of them startup founders, stood outside of the bank’s branch on Silicon Valley’s famed Sand Hill Road in the cold and rain on Friday, knocking on the locked glass doors and trying to get representatives of the Federal Deposit Insurance Corporation to answer their questions.
A drones startup founder there said a withdrawal she made on Thursday hadn’t gone through and that she was concerned about making payroll for her 12 full-time employees. She had tried calling the FDIC multiple times, “but the number doesn’t answer,” she said.
Another customer remarked that he should have brought a bottle of whiskey to pass around as they waited. In trying to get more information from an FDIC representative, he said, “Put yourself in our shoes.” The representative apologised before closing the glass door once again.
Some in the VC and startup world are trying to come up with temporary fixes. Uncapped, a UK financial tech startup that lends to other startups, said it’s launching an emergency funding program to help companies meet payroll and other obligations, as well as longer-term bridge loans to help with working capital.
Alexander Fitzgerald, founder of broadband startup Cuckoo and a former Treasury official, noted that the finances of British startups are already stretched due to a slowdown in venture capital funding market. “British startups need the Treasury to step in fast,” he said.
In Canada, SVB Financial Group’s unit in the country reported C$435 (US$314 million) in secured loans last year, double the C$212 million a year earlier, regulatory filings show. Its customers include e-commerce software provider Shopify Inc. and pharmaceutical company HLS Therapeutics Inc., according to a previous statement by the bank.
Toronto-based advertising-tech firm AcuityAds Holdings Inc. revealed on Saturday it had US$55 million in deposits at SVB, amounting to more than 90% of its cash. The firm had halted trading of its stock Friday after a 14% slump, citing the “unfolding situation” with Silicon Valley Bank.
SANTA CLARA: The fallout from the collapse of Silicon Valley Bank is beginning to spread around the world.
Startup founders in California’s Bay Area are panicking about access to money and paying employees. Fears of contagion have reached Canada, India and China. In the UK, SVB’s unit is set to be declared insolvent, has already ceased trading and is no longer taking new customers. On Saturday, the leaders of roughly 180 tech companies sent a letter calling on UK chancellor Jeremy Hunt to intervene.
“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter seen by Bloomberg. “Many businesses will be sent into involuntary liquidation overnight.”
This is just the beginning. SVB had branches in China, Denmark, Germany, India, Israel and Sweden, too. Founders are warning that the bank’s failure could wipe out startups around the world without government intervention. SVB’s joint venture in China, SPD Silicon Valley Bank Co, was seeking to calm local clients overnight by reminding them that operations have been independent and stable.
“This crisis will start on Monday and so we call on you to prevent it now,” UK startup founders and chief executive officers said in the letter to Hunt. The companies listed in the letter include Uncapped, Apian, Pockit and Pivotal Earth.
Hunt spoke with the governor of the Bank of England about the situation on Saturday morning, and the economic secretary to the Treasury was holding a roundtable with affected firms later in the day, the Treasury said.
Underscoring the challenge governments face in getting a handle of the full extent of the fallout: The UK Treasury has begun canvassing startups, asking how much they have on deposit, their approximate cash burn and their access to banking facilities at SVB and beyond, two people familiar with the matter said, asking not to be identified because the information isn’t public. Treasury declined to comment on the survey.
Founders were anxiously awaiting the outcome of the roundtable and any information about how their deposits at the bank would be handled. Toby Mather, CEO of UK-based education software startup Lingumi, has 85% of his company’s cash in SVB. He tried to transfer some of his accounts, but as of Saturday evening, he wasn’t sure whether that worked. “This is life or death for us,” he said. “These things seemed so mundane before.”
Jack O’Meara, founder of the London genomics startup Ochre Bio, spent the weekend trying, unsuccessfully, to move deposits out of SVB. “If there is no intervention,” he said, “it could really wipe out a generation of entrepreneurial companies.”
As in the US, some SVB deposits in the UK are insured, but it was unclear when those funds would be available. A deeper concern among startup leaders is that the SVB collapse would throttle future funding from venture capital into the UK, where businesses are already hobbled by Brexit.
Asia’s tech leaders are scrambling to assess the potential ramifications too. In Singapore, financiers and entrepreneurs at a Wharton alumni gathering in the the Shangri-La shared news about the fallout, while startup founders and investors at a conference in Mumbai talked about nothing else.
“The impact of the SVB incident on the technology industry should not be underestimated,” analysts led by Liu Zhengning at China International Capital Corp. said in a note. Deposits are crucial for tech startups because they generally require a lot of cash to pay for hefty expenditures including research and development costs and staff salaries, they said.
“If these cash deposits finally have to be impaired in the process of bankruptcy or restructuring, some tech firms may face high cash flow tension,” they said. “The risks of bankruptcy should not be excluded.”
Back in Silicon Valley, US congressman Ro Khanna from Santa Clara held a town hall late Friday that was attended by more than 600 people including startup founders, tech leaders and SVB employees. It went on for more than 2.5 hours with the primary focus on small businesses trying to make payroll across the nation come Monday.
SVB customers in California, many of them startup founders, stood outside of the bank’s branch on Silicon Valley’s famed Sand Hill Road in the cold and rain on Friday, knocking on the locked glass doors and trying to get representatives of the Federal Deposit Insurance Corporation to answer their questions.
A drones startup founder there said a withdrawal she made on Thursday hadn’t gone through and that she was concerned about making payroll for her 12 full-time employees. She had tried calling the FDIC multiple times, “but the number doesn’t answer,” she said.
Another customer remarked that he should have brought a bottle of whiskey to pass around as they waited. In trying to get more information from an FDIC representative, he said, “Put yourself in our shoes.” The representative apologised before closing the glass door once again.
Some in the VC and startup world are trying to come up with temporary fixes. Uncapped, a UK financial tech startup that lends to other startups, said it’s launching an emergency funding program to help companies meet payroll and other obligations, as well as longer-term bridge loans to help with working capital.
Alexander Fitzgerald, founder of broadband startup Cuckoo and a former Treasury official, noted that the finances of British startups are already stretched due to a slowdown in venture capital funding market. “British startups need the Treasury to step in fast,” he said.
In Canada, SVB Financial Group’s unit in the country reported C$435 (US$314 million) in secured loans last year, double the C$212 million a year earlier, regulatory filings show. Its customers include e-commerce software provider Shopify Inc. and pharmaceutical company HLS Therapeutics Inc., according to a previous statement by the bank.
Toronto-based advertising-tech firm AcuityAds Holdings Inc. revealed on Saturday it had US$55 million in deposits at SVB, amounting to more than 90% of its cash. The firm had halted trading of its stock Friday after a 14% slump, citing the “unfolding situation” with Silicon Valley Bank.
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