The parent company of doomed Silicon Valley Bank filed for Chapter 11 bankruptcy protection on Friday after the firm’s rapid implosion upended the US banking sector.
The filing came just days after federal regulators were forced to shut down SVB, which faced a run from worried depositors after its disclosure of $1.8 billion loss on underwater sales of its bond portfolio sparked fears that accounts could be wiped out.
Banking sector chaos continued on Friday – with shares of large US banks down between 1.5% and 2% in premarket trading. Another bank, First Republic, plunged more than 18% after a $30 billion rescue plan failed to reassure the market.
SVB’s failure was the largest of its kind since the Great Recession in 2008 and the second-largest in US history.
SVB Financial Group said it is “no longer affiliated with Silicon Valley Bank” following its collapse into federal receivership. The Federal Deposit Insurance Corp. is now running its successor, Silicon Valley Bridge Bank, which is not part of the bankruptcy filing.
The parent company said its venture capital firm, SVB Capital and its broker deal, SVB Securities, “continue to operate in the ordinary course” and were not included in the bankruptcy filing.
“The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities,” SVB Financial Group chief restructuring officer William Kosturos said in a statement. “SVB Capital and SVB Securities continue to operate and serve clients, led by their longstanding and independent leadership teams.”
“SVB Financial Group will continue to work cooperatively with Silicon Valley Bridge Bank,” Mr. Kosturos added. “We are committed to finding practical solutions to maximize the recoverable value for stakeholders of both entities.”
The company said it “believes it has approximately $2.2 billion of liquidity” remaining as of Friday.
Silicon Valley Bank’s assets were valued at approximately $209 billion at the end of last year. It ranked as the 16th-largest bank in the US prior to its collapse, according to the Federal Reserve.
With Post wires
[Written in collaboration with other media outlets with information from the following sources]
