SVB Collapse Timeline: A Comprehensive Guide

The collapse of Silicon Valley Bank (SVB) sent shockwaves through the financial world. On March 8, 2023, SVB announced it would sell $21 billion in assets to raise capital, but the move failed to reassure investors.

SVB's struggles began in 2022, as the bank's loan portfolio and investment portfolio suffered from a decline in tech stocks. The bank's loan portfolio was heavily weighted towards the tech industry, which was experiencing a downturn.

SVB's exposure to the tech industry made it vulnerable to market fluctuations. The bank's loan portfolio was valued at $81 billion in 2022, with $72 billion of that being loans to tech companies.

The collapse of Silicon Valley Bank (SVB) was a complex event with multiple contributing factors. A lack of diversification was a major issue, as the bank invested heavily in long-term U.S. treasuries and agency mortgage-backed securities, which fell in value when interest rates increased.

SVB's bond portfolio started to drop when the Federal Reserve hiked interest rates in 2022, and the bank was unable to recover its capital because it held onto the bonds until maturity. This lack of liquidity led to a significant loss when the bank tried to sell its bonds to meet customer withdrawals.

A classic bank run also played a role, as many customers withdrew their deposits simultaneously due to fears of the bank's solvency. Many of these customers were startup companies that had deposited large amounts of cash from investors.

The collapse of Silicon Valley Bank (SVB) was a complex event with multiple contributing factors. One major reason was a lack of diversification in their investment portfolio, which left them vulnerable to market fluctuations.

SVB's depositors, mostly startup companies, withdrew their funds simultaneously due to fears of the bank's solvency, triggering a classic bank run. This sudden loss of liquidity was a significant blow to the bank's financial stability.

Silicon Valley Bank's lack of diversification played a significant role in its collapse. They invested a large amount of bank deposits in long-term U.S. treasuries and agency mortgage-backed securities.

These bonds and treasury values fell when interest rates increased, causing SVB's bond portfolio to drop in value. The Federal Reserve hiked interest rates in 2022 to combat inflation, which negatively impacted SVB's bond portfolio.

SVB used to lend out money in short durations, but in 2021, they shifted to long-term securities for more yield. This change left them without short-term investments for quick liquidations, making it difficult to recover their capital.

SVB's insolvency was exposed when economic factors hit the tech sector, causing many bank customers to withdraw their money. Venture capital started drying up, and SVB didn't have the cash on hand to liquidate these deposits because they were tied up in long-term investments.

The bank tried to recover by selling their bonds at a significant loss, but this caused distress to customers and investors. Within 48 hours after disclosing the sale of assets, the bank collapsed.

The instability that led to Silicon Valley Bank's collapse is a crucial aspect to understand. A 2021 Federal Reserve review found several deficiencies in the bank's risk management procedures.

The bank failed to fix six citations issued by the Fed, which is a clear indication of a problem. By July 2022, the Fed placed SVB under a full supervisory review, a sign that regulators were closely monitoring the bank's activities.

In the autumn, San Francisco Fed officials met with SVB senior leaders to discuss the bank's ability to raise cash in a crisis and possible exposure to losses as interest rates rose. This meeting highlights the growing concerns about the bank's stability.

Fed officials determined the bank was using flawed models that led SVB officers to incorrectly believe rising interest rates would increase the bank's interest revenue. This flawed thinking is a key contributor to the bank's instability.

In the week before the collapse, Moody's Investors Service reportedly informed SVB Financial that it was facing a potential double-downgrade of its credit rating. This downgrade would have made it even harder for the bank to raise capital.

On March 8, 2023, SVB announced it had sold over $21 billion worth of its investments, borrowed $15 billion, and would hold an emergency sale of its stock to raise $2.25 billion. This desperate attempt to raise capital was a clear sign of the bank's instability.

Despite these steps, Moody's downgraded SVB on March 8, further eroding the bank's stability. This downgrade made it even harder for the bank to recover from its financial woes.

The bank's downfall was a complex process, but one key factor was the bank's heavy reliance on short-term funding. This made it vulnerable to a sudden loss of confidence among depositors.

Silicon Valley Bank's (SVB) collapse was triggered by a $1.8 billion loss on its securities portfolio, which was comprised mainly of mortgage-backed securities and other long-term bonds.

The bank's assets were largely tied up in these securities, which were worth significantly less than their original value. As a result, SVB was left with a significant hole in its balance sheet.

In the months leading up to the collapse, SVB had been aggressively expanding its commercial banking business, which put further pressure on its liquidity.

U.S. President Joe Biden expressed confidence in the resilience of the banking system on March 13, promising to hold bank executives accountable and propose rule changes to prevent future failures.

Biden also pledged that the government would ensure the availability of deposits without rewarding investors with taxpayer funds. This was a key point of emphasis in his televised remarks from the White House.

Israeli Prime Minister Benjamin Netanyahu pledged to take steps to help Israeli technology companies get through the liquidity crisis, showing international cooperation in addressing the issue.

National Credit Union Administration board members emphasized the safety of the credit union system in contrast to the banking system, but urged Congress to strengthen the Central Liquidity Facility.

A group of 599 venture capitalists, including Garry Tan and David O. Sacks, called for a government intervention to protect uninsured depositors, highlighting the concern for those who may be left vulnerable.

Representatives Ruben Gallego and Eric Swalwell of California called for depositors to be made whole, while Representatives Ro Khanna and Brad Sherman of California urged the Treasury Department and FDIC to affirm that depositors would be protected so they could make payroll.

Governor Newsom, Senator Kyrsten Sinema, and Representative Anna Eshoo of California applauded the FDIC's announcement that it would protect depositors without affecting taxpayers via the Bank Term Funding Program.

HSBC UK agreed to acquire Silicon Valley Bank UK for £1, at no cost to taxpayers, with depositors fully protected. This deal was announced on March 13, 2023.

However, the FDIC had other plans for the commercial banking business of SVB. On March 26, 2023, they announced that First Citizens BancShares would acquire the business, including around $119 billion in deposits and $72 billion of SVB's loans discounted by $16.5 billion.

First Citizens will also acquire SVB Private, and the 17 branches of SVB will reopen as a division of First Citizens Bank. This acquisition will make First Citizens enter the top 20 largest banks in the United States, up from its previous ranking of 30th.

HSBC UK acquired Silicon Valley Bank UK for £1, at no cost to taxpayers and with depositors fully protected.

The acquisition was announced on March 13, 2023.

First Citizens BancShares acquired the commercial banking business of SVB from the FDIC on March 26, 2023.

First Citizens will buy around $119 billion in deposits and $72 billion of SVB's loans discounted by $16.5 billion.

SVB's 17 branches reopened as a division of First Citizens Bank the next day, with all SVB depositors becoming depositors of First Citizens.

SVB Private was initially going to be auctioned separately but First Citizens acquired the business along with SVB.

The FDIC received about $500 million-worth of equity appreciation rights linked to First Citizens' shares.

After the acquisition, First Citizens is set to enter the top 20 in terms of assets.

First Citizens Bank purchased Silicon Valley Bank and assumed the majority of its deposits and loans.

Silicon Valley Bank reported nearly $167 billion in total assets and $199 billion in deposits as of March 10.

First Citizens Bank will purchase about $72 billion in assets at a discounted rate of $16.5 billion.

The FDIC will remain in control of nearly $90 billion in assets and securities in its receivership.

All 17 of Silicon Valley Bank's branches will operate under Silicon Valley Bank, a division of First Citizens Bank.

The FDIC estimated that the SVB failure cost nearly $20 billion.

Receivership is a process where a court-appointed professional takes control of a company's assets and operations. This can happen due to financial difficulties or other reasons stated in the "Causes of Receivership" section.

The receiver's main goal is to recover as much value as possible from the company's assets, which may involve selling off assets or collecting debts owed to the company.

A receiver can be a person or a firm, and their appointment is usually made by a court, as seen in the "Appointment of the Receiver" section.

The receiver's powers and responsibilities are outlined in a court order, which can include the authority to manage the company's affairs, collect debts, and sell assets.

In some cases, the receiver may also be responsible for managing the company's day-to-day operations, such as paying employees and managing the company's finances.

Experts initially didn't expect SVB's collapse to pose a systemic risk to the U.S. financial system.

The bank's collapse created hardships among some tech startups, and companies holding significant uninsured deposits and low cash flow faced significant risks.

Although experts think these effects are temporary, the SVB collapse had a lasting impact on the financial landscape.

Experts initially didn't expect SVB's collapse to pose a systemic risk to the U.S. financial system. However, the bank's collapse created hardships among some tech startups.

Companies holding significant uninsured deposits faced significant risks, especially those with low cash flow.

In March 2023, the market capitalization of U.S. banks lost a combined $100 billion in two days, with European banks losing $50 billion.

SVB's losses highlighted the challenge that banks could face as interest rate increases reduced the market value of bonds that they purchased under low-rate policies.

On March 10 and 11, 2023, USDC's price fell below its US$1 pegged exchange rate during trading, causing Coinbase to halt conversions between USDC and U.S. dollars.

Circle, a peer-to-peer payments technology company, attested that SVB is one of the six banking partners used by the company to manage its cash reserves for USDC.

The Federal Reserve announced the creation of a Bank Term Funding Program to shore up liquidity for other at-risk banks.

Signature Bank was also closed on March 12, 2023, being taken into possession by the New York State Department of Financial Services.

SVB's chief executive was among those requesting the change in 2018 under EGRRCPA that raised the threshold for periodic stress testing under the Dodd-Frank Act.

SVB had reached the threshold under the Dodd-Frank Act requiring it to submit a resolution plan ("living will") to the FDIC in 2021.

SVB applied for billions of dollars in funding from FHLB to survive the large amounts of deposit withdrawals after its collapse.

The Federal Reserve approved a rate increase on March 22, 2023, despite concerns that the SVB collapse might prevent it.

One year after the SVB collapse, its bankruptcy resulted in the biggest fine since the financial crisis of 2008, a $285 million fee in penalties to retire emergency financing secured through the FHLB system.

The SVB collapse led to a flurry of legal and financial actions. An investigation by the Federal Reserve Board of Governors was released on April 28, criticizing lax oversight of SVB during the tenure of Randal Quarles.

The U.S. Securities and Exchange Commission and U.S. Department of Justice have opened investigations into the bank's financial disclosures and executives' recent trading plans. A Securities Class Action was filed against SVB in the U.S. District Court for the Northern District of California on March 13, alleging fraud for false statements made by executives and the bank.

Senator Elizabeth Warren introduced legislation to roll back provisions of the EGRRCPA, including regular stress testing, and was cosponsored by about 50 Democrats in the Senate and House of Representatives.

Credit Suisse faced solvency issues, leading to a government-brokered deal where UBS agreed to buyout the bank for $3.25 billion.

Moody's Investor Service put six regional banks on review for credit rating downgrades, citing high unrealized losses and large amounts of deposits not covered by the FDIC.

The banks on review include Comerica Bank, First Republic Bank, Intrust Financial, UMB Financial, Western Alliance Bancorporation, and Zions Corp.

New York Community Bank acquired a large portion of Signature Bank in a $2.7 billion deal on March 19, with Signature Bank's branches being rebranded as Flagstar Bank.

Silicon Valley Bank's former parent company, SVB Financial Group, filed for Chapter 11 bankruptcy protection on March 17 to address civil lawsuits from shareholders.

The legal actions taken against Silicon Valley Bank (SVB) are a significant aspect of the banking crisis.

An investigation by the Federal Reserve Board of Governors, led by Vice Chair for Supervision Michael Barr, was released on April 28, focusing on lax oversight of SVB during the tenure of Randal Quarles.

The U.S. Securities and Exchange Commission and U.S. Department of Justice have reportedly opened investigations into the bank's financial disclosures and executives' recent trading plans.

A shareholder filed a Securities Class Action against SVB on March 13 in the U.S. District Court for the Northern District of California, alleging fraud for false statements made by executives and the bank.

Senator Elizabeth Warren introduced legislation to roll back some provisions of the EGRRCPA, including regular stress testing, which has been cosponsored by about 50 Democrats in the Senate and House of Representatives.

Former CEO Gregory W. Becker was asked to appear before the Senate Committee on Banking, Housing, and Urban Affairs, but he did not attend the hearing on March 28.