This article appeared as part of The Weekend Pitch newsletter. Most likely, SVB's buyer would also be a big bank as its massive private loan portfolio is too large for a non-bank venture lender to absorb.
Valley liquidation series#
In 2008, regulators seized Washington Mutual and sold it to JP Morgan for $1.9 billion following a series of rating agency downgrades and a plummeting stock price. The main precedent for such a bank failure is Washington Mutual's collapse during the global financial crisis. Or the FDIC could find a buyer through a bidding process. If its liabilities outweigh its assets, the bank is insolvent, and the 93% of SVB's depositors who are uninsured will take a hit. In this process, SVB's assets and liabilities would be compared. If no buyer steps in, the assets will go to a market auction. One road could lead to a liquidation process. This situation could move in several directions. The assets of now-defunct Silicon Valley Bank are up for grabs, specifically its roughly $73 billion loan book, around 20% of which is venture debt. Like the rest of you, I've been immersed in the unfolding collapse of Silicon Valley Bank.Īfter a frantic 24 hours of calls with investors and founders, and a deep and unredeemable spiral down several VC Twitter rabbit holes, my team and I have surfaced with an outline of the potential next steps for SVB's business.
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