JPMorgan kept busy while the disaster at Silicon Valley Bank unfolded earlier this month – and may have managed to scoop up most of the skittish customers who fled the tech-focused financier, On The Money has learned.
Multiple venture capitalists have privately polled hundreds of tech founders to ask where they moved their bank accounts during the crisis — and more than 90% went to JPMorgan, according to an informal tally shared by the VCs.
JPMorgan’s competitors in retail and commercial banking include Bank of America, which has reportedly added $15 billion in deposits since the US banking crisis kicked off last month. Ditto for Wells Fargo, which is based in San Francisco to boot.
Nevertheless, when push came to shove, tech investors and entrepreneurs still saw JPMorgan as the biggest, safest bank in America, according to sources.
“In a fire drill situation – you just need to move your money to the safest bank,” said one venture capitalist who advised his founders to move money from SVB to JPMorgan.
“JPMorgan is the 800-pound gorilla – everyone already had an account there,” another venture capitalist who advised founders to switch to JPMorgan told On The Money. “I know almost 100 people who went to JPMorgan… I know only one person who went elsewhere — to Bank of America.”
Insiders note that it wasn’t just a case of a big bank answering phone calls. Rather, JPMorgan bankers “stayed up all night opening accounts” for frantic SVB clients looking to move their funds, as The Post previously reported.
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Word quickly spread that JPMorgan — which has built out its presence in San Francisco in recent years — was a well-oiled machine, sources told The Post.
“This was a war room situation,” a source close to the bank told The Post. “Everyone was filling documents as fast as they could.”
For clients desperate to open first-time accounts, JPMorgan has expedited the KYC (know your customer) process — a regulation that requires banks to verify clients’ identities and understand their financial activities. KYC can often take a week or more, but in some cases JPMorgan was getting it done just two days, sources with knowledge told The Post.
As On The Money reported last week, SVB bankers have been emailing depositors with venture loans – and warning them if they don’t transfer the majority of their money back within 10 business days, their loans will be called.
SVB bankers have been citing conditions on those favorable loans that require startups to keep 80% to 85% of their funds at SVB, sources close to the bank told The Post.
But even those who are being forced to reluctantly return some of their money to SVB are keeping their JPMorgan accounts open, according to sources.
A spokesperson for JPMorgan declined to comment.
[Written in collaboration with other media outlets with information from the following sources]
