The fallout from the collapse of Silicon Valley Bank continues, with senior executives leaving what remains of the business, and lawmakers questioning former depositors over alleged “cozy relationships” with the bank.
TechCrunch is reporting that SVB’s new chief risk officer and the chief audit executive are leaving their jobs. New CRO Kim Olsen had only started working for the bank in January, and in the chaos of the bank’s collapse it was revealed that the CRO role had remained unfilled for most of the previous year.
Requests for press comment are going unanswered, but the departures follow a string of executive exits since the bank was taken over by regulators. First Citizens Bank has bought a slice of the business and there are rumors that FCB CRO Lorie Rupp may be set to take over responsibility for the combined institution.
Innovation economy
The website also reports that HSBC has recruited 40 former SVB bankers including former Chief Business Officer Sunita Patel to help build a new project described as “dedicated to the innovation economy”.
Meanwhile Senator Elizabeth Warren (D-MA) and Representative Alexandria Ocasio-Cortez (D-NY) have sent letters to 14 firms including BlockFi, Circle and Lending Club raising concerns over what they call “mutual backscratching arrangements” that encouraged firms to keep large uninsured deposits at SVB.
The firms have been asked to detail any conditions and benefits associated with maintaining a relationship with SVB, including the offer of lower interest rates to startup founders. Warren and Ocasio-Cortez also want to investigate claims that VC firms were given lines of credit that enabled them to get money to tech startups fast, and to sponsor industry trips, conferences and dinners.
Not insured
“Congress, bank regulators, and the public are owed an explanation for the bank’s hyper-reliance on tech industry firms and investors, the extent to which this resulted in an abnormally high percentage of deposits that were not insured,” the letters say.
Warren added: “Silicon Valley Bank’s unusually cozy relationship with its clients increased the threat of contagion when the bank went under. The American people deserve to know how these mutual backscratching arrangements developed, who benefited from them, and what role they played in Silicon Valley Bank’s failure.”
Some $13bn in deposits was held by SVB’s 10 largest accounts and according to S&P Global, while roughly 94% of the bank’s total domestic deposits were uninsured at the end of 2022.
The other companies that received letters are BILL Holdings, Eiger Biopharmaceuticals, Gingko Bioworks, iRhythm, Oncorus, Payoneer, Protagonist Therapeutics, Roblox, Rocket Lab USA, Roku, and Sangamo Therapeutics.