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3 Apr 2023 - 10k Words - SVB Special

By: Equitable Investors

10k Words - SVB Special

Equitable Investors

March 2023


Almost half of the US VC universe banked with Silicon Valley Bank (SVB) and the bank was upfront in disclosing that "client cash burn remains ~2x higher than pre-2021 levels and has not adjusted to the slower fundraising environment". It also wasn't a secret that SVB held long duration debt investments that it had not marked-to-market. If it had its capital adequacy would have been brought into question immediately. SVB is unique in terms of its narrow base of clients - the vast majority of its deposits are not covered by the FDIC's $US250,000 insurance per depositor.

Figure 1: SVB's market position

Source: SVB

Figure 2: SVB's QoQ period-end total client funds (TCF) by client activity in $US billions

Source: SVB

Figure 3: Impact of unrealised securities losses on capital ratios - Q4 2022

Source: JP Morgan Asset Management, @TheRealDanSaedi

Figure 4: SVB's deposit mix - insured and uninsured

Source: Federal Financial Institutions Examination Council, WSJ


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