On Monday, Tim Mayopoulos, the new CEO of Silicon Valley Bank (SVB), held a private Zoom meeting with select LPs and investors. In this meeting, he emphasized the importance of returning deposits to SVB in order for the bank to survive.
The Future of SVB: Uncertainty and Options
Mayopoulos, who previously served as CEO and executive at Fannie Mae, acknowledged that the future of SVB is still being charted out. However, he stressed that depositors’ actions will significantly impact these decisions. There are three possible options for the next incarnation of SVB Bridge Bank: partnering with another financial institution or investors, winding down the bank, or becoming part of a new organization.
"We want to be clear about this," Mayopoulos said during the meeting. "The preferred course is not to wind down [the bank]. The preferred course is either to allow Silicon Valley Bank to continue to operate as an independent institution with a new charter under Silicon Valley Bridge bank or to become part of another organization, or for a set of backers to provide the capital and funding for the business going forward."
Deposits and FDIC Protection
Mayopoulos asked clients to return their deposits, emphasizing that both existing and new deposits will be protected by the Federal Deposit Insurance Corporation (FDIC). He also clarified that the newly formed bridge bank is not subject to the typical $250,000 limit on insured accounts.
"The United States government has articulated clearly and unequivocally that all the deposits at this institution are guaranteed," Mayopoulos said. "So if for some reason the institution can’t pay those deposits, the Federal Deposit Insurance Corporation will pay."
Services and Business Units: Preserving Value
During the meeting, Mayopoulos addressed the future of SVB’s services and business units beyond the protected arm deposits. He acknowledged that preserving these capabilities is crucial to maintaining the bank’s franchise value.
"We clearly see that a big part of the franchise value of the company is preserving all of those capabilities," Mayopoulos said. "It’s too early for me to tell… that’s very much on our minds."
Relationship with SVB UK
Mayopolous confirmed that the relationship between SVB in the U.S. and SVB UK no longer exists.
Return Deposits, Diversify Cash
Mayopoulos asked clients to "at least some of your money" back as part of the diversification strategy around where they keep their cash and deposits.
Social Media Perception: Addressing Wind-Down Rumors
During the meeting, Mayopoulos addressed social media’s perception of SVB early on: "We are not in wind-down mode." This reiterates a note that he sent to clients yesterday, in which he stated that the bank is conducting business as usual since the FDIC took over deposits.
Regaining Trust
Mayopolous acknowledged the importance of regaining trust with clients. He emphasized that trust needs to be rebuilt and that this will take time.
"The biggest challenge we have is rebuilding trust," Mayopoulos said. "We need to demonstrate our commitment to serving entrepreneurs, startups, and investors in Silicon Valley."
A Call for Action
Mayopolous ended the meeting by calling on clients to return their deposits and work with the bank to build a stronger future.
"We’re not just looking for your money," Mayopoulos said. "We’re looking for your partnership and commitment to help us rebuild this institution and create a brighter future."
Conclusion
The meeting between Tim Mayopoulos and select LPs and investors provided valuable insights into the future of SVB. While there are still many uncertainties, one thing is clear: the bank needs clients’ deposits to survive.
As the tech industry continues to navigate the fallout from SVB’s collapse, it will be essential for entrepreneurs, startups, and investors to work together with Mayopoulos and his team to build a stronger future for the institution.