By ROSS IBBETSON and KEITH GRIFFITH FOR DAILYMAIL.COM
A Silicon Valley Bank branch in Manhattan today called the cops on tech investors trying to pull their cash out as a run on the bank forced regulators to seize its assets.
Police were called after ‘about a dozen’ financiers, including former Lyft executive Dor Levi, showed up outside the building on Park Avenue as investors scrambled to get their money out amid the biggest collapse since the Great Recession.
The Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today after depositors – mostly tech workers and start-up firms – triggered a run on the bank following the shock announcement of a $1.8bn loss. The bank took a hammering in pre-market with its price plunging 66 percent before trading was halted.
Investors are only insured up to $250,000 and there have already been horror stories. Ashley Tyrner, CEO of Boston wellness firm FarmboxRx, said she had at least $10m deposited with SVB and has been frantically calling her banker. She said it had been ‘the worst 18 hours of my life.’
With around $209bn in assets, SVB is the second-largest bank failure in US history after the 2008 collapse of Washington Mutual. The crash is expected to have a colossal impact on the tech sector, with many start-ups using SVB as their sole account and creditor. It is the first FDIC-insured bank to fail in more than two years, the last being Almena State Bank in October 2020.
The collapse of SVB came less than 48 hours after the bank disclosed plans to raise over $2 billion from investors to counter $1.8 billion in losses from the sale of bonds, which were liquidated to cover declining deposits.
That announcement spurred a bank run, pushing the firm into failure as customers withdrew their deposits at a furious pace over fears it faced insolvency.
Following the shutdown, the FDIC said SVB depositors will have full access to their insured deposits no later than Monday morning. The federal agency insures each depositor to at least $250,000.
As well as the sole branch in NYC, SVB has 17 branches in California and Massachusetts, the FDIC said.
It means investors like Tyrner with $10m in the bank stand to lose millions. ‘It was pure and utter panic,’ she said of her mindset after learning the news.
Tyrner, who heads a company of 63 staff, told The New York Post ‘all panic broke loose’ on Thursday morning when senior executives called her saying they needed her to urgently approve a wire transfer. ‘When I went to log in to approve the wire, the system was completely crashed,’ Tyrner said. ‘It would not let anybody in.’