SVB Financial Group explained

SVB Financial Group
Type:Public
Former Names:Silicon Valley Bancshares (1982–2005)
Industry:Financial services
Founded:[1]
Hq Location City:New York City[2]
Hq Location Country:United States
Revenue: US$7.40 billion (2022)
Net Income: US$1.51 billion (2022)
Assets: US$211.8 billion (2022)
Equity: US$16.0 billion (2022)
Num Employees:8,553 (December 2022)
Ratio:Tier 1 15.4% (2022)
Footnotes:[3] [4]

SVB Financial Group (SVB or SVBFG) is a financial services holding company headquartered in New York City. The company's main business unit was commercial bank Silicon Valley Bank, until the bank failed in March 2023 after a bank run. The company was a member of the S&P 500 index until March 15, 2023.[5] [6] According to public filings, as of December 31, 2022, SVB Financial Group had 164 subsidiaries.[7]

Until March 2023, the companies subsidiaries included Silicon Valley Bank and SVB Private, a private banking service affiliated with Silicon Valley Bank that, along with its affiliates SVB Investment Services and SVB Wealth, offered client services especially catered to private equity and high-net-worth individuals. Both Silicon Valley Bank and SVB Private were placed in receivership and sold to First Citizens Bank.[8] [9] SVB Securities was sold to its management in July 2023 and renamed Leerink Partners.[10] SVB Capital was sold in May 2024 to a newly formed entity affiliated with Pinegrove Capital Partners.[11]

History

SVB Financial was founded as Silicon Valley Bancshares on April 23, 1982, by Bill Biggerstaff and Robert Medearis over a poker game.[12] [13] Silicon Valley Bank was incorporated as a wholly-owned subsidiary in October 17, 1983.

In 1988, the company went public via an initial public offering, raising $6 million.[14]

The company's stock price soared through the dot-com bubble but fell 50% when the bubble burst.[15] The company reincorporated as a Delaware corporation in 1999.[3] [16] Ken Wilcox became CEO in 2000[17]

In 2001, the company's investment banking arm, SVB Securities, expanded its business with a $100 million acquisition of Palo Alto Alliant Partners, which was rebranded SVB Alliant.[18] In 2002, it formally entered the private banking business, building on prior experience and relationships with wealthy venture capitalists and entrepreneurs.[19]

On May 31, 2005, Silicon Valley Bankshares rebranded as SVB Financial Group, signaling the company's diversification away from commercial banking.[20] SVB Alliant ceased operations in 2007.[21]

In December 2008, SVB Financial received a $235 million investment from the U.S. Treasury through the Troubled Asset Relief Program.[22] The U.S. Treasury received $10 million in dividends from SVB Financial and, in December 2009, the company repurchased the outstanding stock and warrants held by the government, funding this through a stock sale of $300 million.[23]

In 2015, CEO Greg Becker indicated that SVB had yet to make immediate plans to re-enter the investment banking sector as it had before 2006.[24]

In January 2019, SVB Financial acquired Leerink Partners LLC, and renamed the business SVB Leerink.[25] In 2021, SVB acquired Boston Private Financial Holdings and merged its subsidiary Boston Private Bank & Trust Company into Silicon Valley Bank and SVB Private.[26] In 2021, SVB acquired media and telecom research company MoffettNathanson LLC.[27] In February 2022, SVB Leerink was rebranded as SVB Securities.[28]

Collapse of Silicon Valley Bank

See main article: Collapse of Silicon Valley Bank.

In March 2023, Silicon Valley Bank experienced a bank run and collapsed. Then Federal Reserve Board Vice Chair for Supervision Michael Barr reported its customers tried to withdraw 81% of its deposits ($142 billion of a $175 billion total, as of the end of 2022) over two days.[29] The failure of Silicon Valley Bank was the largest of any bank since the 2007–2008 financial crisis by assets, and the second-largest in U.S. history behind that of Washington Mutual.[30] On March 10, 2023, the California Department of Financial Protection and Innovation closed SVB, Santa Clara, and appointed the FDIC as receiver,[31] which transferred all the bank's assets to a newly-established bridge bank.[32] The holding company was not included in the bank closing or resulting receivership.[33] It is no longer affiliated with either Silicon Valley Bank or SVB Private. When the FDIC took over Silicon Valley Bank on March 10, it seized the Santa Clara headquarters shared by the bank and SVB Financial Group; as a result, the holding company moved its headquarters to its offices in New York City.

On March 13, 2023, SVB Financial Group began exploring a potential sale of the bank's sister companies SVB Capital and SVB Securities. The latter's founder, Jeffrey Leerink, expressed interest in buying back the firm.[34] SVB Financial Group filed for Chapter 11 bankruptcy protection on March 17, one week after the bank's failure.[35] A group including Centerbridge Partners, Davidson Kempner Capital Management, and PIMCO reportedly bought a stake in the company in anticipation of the bankruptcy.

On June 18, 2023, SVB Financial Group announced it had agreed to sell SVB Securities in a management buyout, led by Leerink, with funds from the Baupost Group. MoffettNathanson LLC was not included in the sale.[36] [37] In July 2023, the buyout was approved in bankruptcy court, and SVB Securities was renamed to Leerink Partners.[10]

On January 9, 2024, SVB Financial Group announced it planned to turn control of SVB Capital over to a new company controlled by its creditors.[38]

On 20 March, SVB Financial Group announced that it would sell it Indian subsidiary SVB Global Services India to First Citizens BancShares.[39]

On 3 May, SVB Financial Group entered into a definitive agreement to sell its investment platform business, SVB Capital, to a newly formed entity affiliated with Pinegrove Capital Partners and backed by Brookfield Asset Management and Sequoia Heritage.[11]

External links

Notes and References

  1. Web site: Silicon Valley Bancshares Form 10-K. Silicon Valley Bancshares. EDGAR. Securities and Exchange Commission. March 19, 1999. 3. March 11, 2023.
  2. News: Silicon Valley Bank's ex-parent company is no longer based in Silicon Valley. Cromwell. Schubarth. Silicon Valley Business Journal. American City Business Journals. San Jose, California. March 23, 2023. March 24, 2023.
  3. Web site: SVB Financial Group 2022 Annual Report (Form 10-K) . February 24, 2023 . . March 10, 2023 . March 10, 2023 . https://web.archive.org/web/20230310190258/https://www.sec.gov/ix?doc=%2FArchives%2Fedgar%2Fdata%2F719739%2F000071973923000021%2Fsivb-20221231.htm . live.
  4. Web site: Exhibit 21.1-Subsidiaries of SVB Financial Group . February 24, 2023 . U.S. Securities and Exchange Commission.
  5. Web site: Assis . Claudia . Silicon Valley Bank out of S&P 500 index; Insulet selected to replace it . 2023-03-11 . MarketWatch . EN-US . March 11, 2023 . https://web.archive.org/web/20230311041710/https://www.marketwatch.com/story/silicon-valley-bank-out-of-s-p-500-index-insulet-selected-to-replace-it-c9d954c8 . live .
  6. https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20230310-1461992/1461992_sivb-5.pdf
  7. Web site: Exhibit 21.1-Subsidiaries of SVB Financial Group – SVB Financial Group Annual Report on Form 10-K . SVB Financial Group . 24 Feb 2023 . . . 14 Mar 2021.
  8. News: SVB Financial files for bankruptcy protection as it weighs sale of non-bank units. Cromwell. Schubarth. Silicon Valley Business Journal. American City Business Journals. San Jose, California. March 17, 2023. March 17, 2023.
  9. Web site: SVB Private Goes to First Citizens, But How Much of It Is Left? . March 27, 2023 . . Britton . Diane . 2023-03-28.
  10. News: Chesto . Jon . July 17, 2023 . How Boston's biggest investment bank was reborn after SVB collapsed . . subscription . https://archive.today/20230717173032/https://www.bostonglobe.com/2023/07/17/business/leerink-partners-svb/ . 27 July 2023 . July 17, 2023 . live.
  11. Web site: PYMNTS . Pinegrove Capital Partners-Affiliated Entity to Buy SVB Capital . PYMNTS.com . 5 May 2024 . 3 May 2024.
  12. Web site: Pollard . Amelia . 10 March 2023 . Silicon Valley Bank Collapses in Biggest Failure Since 2008 . live . https://web.archive.org/web/20230310190224/https://news.bloomberglaw.com/crypto/silicon-valley-bank-collapses-enters-fdic-receivership . March 10, 2023 . March 10, 2023 . Bloomberg Law.
  13. Web site: Silicon Valley Bank celebrates 20 years of dedication to entrepreneurs. Svb.com. October 17, 2003. June 16, 2020. December 18, 2003. https://web.archive.org/web/20031218230437/http://www.svb.com/pr/index.asp?q=q4&d=101703. live.
  14. News: The rise and stunning fall of Silicon Valley Bank. Kia. Kokalitcheva. Axios. March 11, 2023.
  15. News: Silicon Valley Bank Strengthens Its Roots . The New York Times. April 1, 2015. Nathaniel. Popper. limited. April 1, 2020 . https://web.archive.org/web/20200401051042/https://www.nytimes.com/2015/04/02/business/dealbook/silicon-valley-bank-strengthens-its-roots.html. live.
  16. News: Silicon Valley Bank extends reach to Bangalore, London . Sarah . Lacy . . September 12, 2004. Sarah Lacy . September 27, 2017 . https://web.archive.org/web/20170927112045/https://www.bizjournals.com/sanjose/stories/2004/09/13/story7.html . live.
  17. News: Silicon Valley Bank's parent to repay all its $235M in TARP money . Mark . Calvey . . December 18, 2009 . subscription . September 27, 2017 . https://web.archive.org/web/20170927000337/https://www.bizjournals.com/sanfrancisco/stories/2009/12/14/daily74.html . live.
  18. News: Silicon Valley Bank to acquire Alliant Partners. . August 17, 2001 . February 22, 2004 . https://web.archive.org/web/20040222122751/http://www.bizjournals.com/sanjose/stories/2001/08/13/daily34.html. live.
  19. News: Silicon Valley Bank targeting San Jose for private banking . . Sarah . Lacy. Sarah Lacy . August 17, 2003. subscription . September 27, 2017. https://web.archive.org/web/20170927000004/https://www.bizjournals.com/sanjose/stories/2003/08/18/smallb4.html . live.
  20. Silicon Valley Bank Parent Changes Name to Reflect Successful Strategy and Future Growth; SVB Financial Group Becomes Holding Company Name; Debuts on Nasdaq Exchange Today. SVB Financial Group. Santa Clara, California. May 31, 2005. March 11, 2023.
  21. SVB Financial Group Announces it Will Cease Operations at SVB Alliant and Writes Off Remaining Goodwill of Investment Banking Arm. SVB Financial Group. Santa Clara, California. July 18, 2007. March 18, 2023.
  22. News: SVB Financial Becomes Second Local Bank To Partake In TARP Program . . December 3, 2008 . November 14, 2012 . September 27, 2017 . https://web.archive.org/web/20170927001050/http://www.siliconbeat.com/2008/12/03/svb-financial-becomes-second-local-bank-to-partake-in-tarp-program/ . dead.
  23. News: Silicon Valley Bank's parent to repay all its $235M in TARP money . Mark . Calvey . . December 18, 2009 . October 17, 2017 . September 27, 2017 . https://web.archive.org/web/20170927000337/https://www.bizjournals.com/sanfrancisco/stories/2009/12/14/daily74.html . live.
  24. News: Popper . Nathaniel . 2015-04-01 . Silicon Valley Bank Strengthens Its Roots . en-US . . 2023-03-12 . 0362-4331.
  25. SVB Financial Group Completes Acquisition of Healthcare Investment Bank Leerink Partners. Group. SVB Financial. PR Newswire. en. January 31, 2019. February 1, 2019. https://web.archive.org/web/20190201013332/https://www.prnewswire.com/news-releases/svb-financial-group-completes-acquisition-of-healthcare-investment-bank-leerink-partners-300773016.html. live.
  26. SVB Financial Group Completes Acquisition of Boston Private. SVB Financial Group. Santa Clara, California. July 1, 2021. March 11, 2023.
  27. Web site: Sherman . Alex . Silicon Valley Bank agrees to acquire boutique media and telecom research firm MoffettNathanson . . 13 July 2023 . en . 13 December 2021.
  28. Web site: SVB Leerink LLC Announces Company Name Change to SVB Securities LLC . Leerink Partners . 7 November 2023 . 1 February 2022.
  29. Web site: Son . Hugh . SVB customers tried to withdraw nearly all the bank's deposits over two days, Fed's Barr testifies . CNBC . 10 April 2023 . en . 28 March 2023.
  30. News: Silicon Valley Bank Shut Down, Biggest Bank to Fail Since Financial Crisis. Angela. Palumbo. Karishma. Vanjani. Carleton. English. MarketWatch. live . https://web.archive.org/web/20230310231709/https://www.marketwatch.com/articles/svb-financial-stock-portfolio-outlook-loss-93287f3d . March 10, 2023 . March 10, 2023.
  31. Web site: FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California . 2023-03-12 . www.fdic.gov . en-US.
  32. FDIC Acts to Protect All Depositors of the former Silicon Valley Bank, Santa Clara, California. Federal Deposit Insurance Corporation. Washington, D.C.. March 13, 2023. March 13, 2023.
  33. Web site: Silicon Valley Bank - Santa Clara, California: Frequently Asked Questions. Federal Deposit Insurance Corporation. March 12, 2023. March 12, 2023.
  34. News: Schubarth . Cromwell . March 13, 2023 . After Silicon Valley Bank's collapse, parent company SVB is looking at selling itself and its other units . . . San Jose, California . March 13, 2023 . March 13, 2023 . https://web.archive.org/web/20230313211828/https://www.bizjournals.com/sanjose/news/2023/03/13/silicon-valley-bank-parent-weighs-sale-of-units.html . live .
  35. Web site: SVB Financial seeks bankruptcy protection. March 17, 2023. March 17, 2023. Reuters. en.
  36. Web site: SVB agrees to sell its investment banking division . . 21 June 2023 . en . 18 June 2023.
  37. Web site: Kokalitcheva . Kia . SVB Financial Group agrees to sell investment bank to CEO Jeff Leerink . . 21 June 2023 . 18 June 2023.
  38. Web site: Knauth . Dietrich . SVB Financial plans to hand VC business to creditors . Reuters . 31 March 2024 . 9 January 2024.
  39. Web site: Defunct SVB Financial Group to sell Indian subsidiary to First Citizens Bancshares . Reuters . 31 March 2024 . 20 March 2024.

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