Silicon Valley Bank
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Silicon Valley Bank (SVB) was a Santa Clara, California-based commercial bank founded in 1983 by Bill Biggerstaff and Robert Medearis to serve startup companies. It became the largest bank by deposits in Silicon Valley and the preferred bank of almost half of all venture-backed tech startups, offering commercial banking to technology, life sciences, private equity, and venture capital clients, plus private banking for founders and executives. Its parent was SVB Financial Group.
02 / Silicon Valley Bank FAILURE REASONS
Failure factors supported by the current evidence
Silicon Valley Bank invested a surge of deposits in long-duration securities whose market value fell as interest rates rose. Startup funding then slowed, clients withdrew deposits, and the bank realized a US$1.8 billion loss while selling securities to meet withdrawals; the failed capital raise accelerated the run.
Long-duration securities lost value as interest rates rose.
Client withdrawals forced the bank to sell loss-making securities.
A failed capital raise accelerated the loss of depositor confidence.
03 / EVENT HISTORY
Events in the structured record
- Bank founded
Silicon Valley Bank is founded in California by Wells Fargo executive Bill Biggerstaff and Stanford professor Robert Medearis to focus on startup companies; Roger V. Smith becomes its first CEO and the bank launches on October 17, 1983.
- Balance-sheet strain
Rising interest rates during the 2021-2023 inflation spike leave SVB with mark-to-market unrealized losses of more than $15 billion on securities held to maturity as of December 31, 2022, while its deposit base remains heavily concentrated in venture-backed startups.
- Bank run and seizure
After announcing a capital raise in early March, depositors withdraw about $42 billion in a bank run; on March 10, 2023 the California Department of Financial Protection and Innovation seizes SVB, citing inadequate liquidity and insolvency, and appoints the FDIC as receiver - the second-largest bank failure in U.S. history.
- Resolution and sale
On March 12, 2023 the Treasury, Federal Reserve, and FDIC jointly guarantee all SVB depositors; the FDIC creates Silicon Valley Bridge Bank N.A. on March 13. On March 27, 2023 First Citizens Bank & Trust acquires SVB's deposits and loans ($72 billion at a $16.5 billion discount), while the FDIC retains about $90 billion of the bank's $167 billion in assets. SVB Financial Group files for Chapter 11 bankruptcy on March 17, 2023.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
SVB's long-term Treasury bond portfolio lost market value as interest rates rose, leaving more than $15 billion in unrealized losses by end-2022.
- 02
A failed capital raise announcement in March 2023 triggered a $42 billion bank run, collapsing the bank on March 10, 2023.
- 03
Regulators seized the bank and sold its deposits and loans to First Citizens Bank on March 27, 2023; the FDIC estimated the failure would cost its Deposit Insurance Fund about $20 billion. No single disclosed realized loss of the bank meeting the four-item test was found.