Some Silicon Valley Bank customers are struggling to withdraw money from their bank accounts, numerous sources tell ukbusinessupdates.com.
The apparent spate of withdrawal attempts comes after SVB announced yesterday that it lost $1.8 billion in sales of US Treasury bonds and mortgage-backed securities it had invested in, due to rising interest rates. The bank also said it was raising more capital and investing in higher-yield products. Concerns arose, causing the share price to fall more than 50% at the time of publication.
Dozens of VCs are advising their portfolio companies to pull their assets out of the bank, sources say, while others are urging founders to at least diversify where they hold their capital. Others, meanwhile, are warning that the panic is coming too soon – perhaps due to news earlier this week that Silvergate, another bank, is closing. As a result, SVB clearly experiences deposit volatility from a subset of its users.
A source tells ukbusinessupdates.com that parts of the SVB site are down, as is one of the customer support phones, despite using different browsers and apps to try to move their capital. Another says account access controls are now view-only, meaning users can’t make withdrawals or transfers. Others on Twitter say they can’t log into the internet banking portal in general. A VC tells me that because the website is down, the founders of the wallet are currently at SVB bank branches asking for cash release.
ukbusinessupdates.com spoke to a founder, who asked for anonymity, who said they finally reached SVB’s customer service by calling a local representative. The representative told them that the website is spotty due to high traffic from users. The founder eventually succeeded and transferred the millions they had in the bank to First Republic Bank, a transaction expected to take place tomorrow morning.
“We’ll probably return some if not all of them when the dust settles,” the founder said, adding that they don’t want to participate in an attempted bank run. Still, they said, “the game theory here is that if you don’t, you could lose your business, and if you do, it’s not that big of a deal.” The entrepreneur did talk about the ethical obligations of not collecting money, but said that “everyone is nervous, everyone is thinking about SBF”, so they ended up transferring money.
Another founder told ukbusinessupdates.com that they bank with SVB and are “taking a less alarmist approach despite some emails from investors. We’re diversifying where we keep our money (we’re a credit card company, so we’ve moved some to our sponsor bank.) We’re very confident that SVB isn’t going anywhere.
In a conversation earlier today, CEO Greg Becker told clients that the bank has “enough liquidity” to support its clients “with one exception: if everyone tells each other that SVB is in trouble, it becomes a challenge.” The executive asked VC clients to “keep calm. That’s my question. We’ve been around for 40 years, supporting you, supporting the portfolio companies, supporting venture capitalists.
If you have a juicy tip or clue about happenings in the corporate world, you can reach Natasha Mascarenhas on Twitter @nmasc_ or on Signal at +1 925 271 0912. Anonymity requests are respected.