'Utterly irresponsible': SVB failure was caused by a banking — not tech — crisis, top VC says
svbbankinginterest-rate-riskventure-capitalfinancial-crisis
Abstraction: SVB failure attributed to interest-rate mismatch not tech sector collapse
Key points:
- Amadeus Capital CEO Anne Glover called SVB's collapse "banking 101 failure" — taking short-term VC deposits and investing in long-maturity bonds
- SVB tried to raise $2.25B to plug a $1.8B hole from selling $21B in bonds at a loss after rates rose
- Management failed to hedge the interest rate exposure on mortgage bonds purchased with VC and hedge fund deposits
- SVB UK arm was sold to HSBC for £1 in a government-facilitated deal protecting £6.7B in deposits
- Credit Suisse was the most notable broader banking failure, rescued by UBS in a Swiss government-coordinated deal
- Glover: tech community was impacted by the failure but was not its cause
Connections: Silicon Valley Bank · Hsbc · Credit Suisse · Interest Rate Risk · Bank Runs · Asset Liability Mismatch
Source: https://www.cnbc.com/2023/04/21/svb-failure-was-caused-by-a-banking-not-tech-crisis-top-vc-says.html