Embattled SVB Financial Group has filed a voluntary petition in U.S. bankruptcy court for a court-supervised restructuring under Chapter 11 to preserve value.
In announcing the news on March 17, SVB said funds from its venture capital arm SVB Capital and broker-dealer SVB Securities, as well as funds from general partner entities, were not included in the bankruptcy proceedings. These entities will continue to operate in a normal manner while SVB Financial Group continues to explore strategic options for its business.
SVB Financial Group also stressed that the firm is no longer affiliated with Silicon Valley Bank N.A. or the bank's private banking and wealth management business, SVB Private. The bank's successor, Silicon Valley Bridge Bank, N.A., operates under the jurisdiction of the Federal Deposit Insurance Corporation (FDIC) and is not included in the Chapter 11 filing.
The company has $2.2 billion in liquidity, according to estimates from SVB Group. In addition to the cash and its interests in SVB Capital and SVB Securities, the company has "other valuable investment securities accounts and other assets," and the company is exploring strategic options.
The announcement noted that SVB Group's total financing debt, approximately the aggregate principal amount of the $3.3 billion unsecured notes, "has recourse only to SVB Financial Group" and has no impact on SVB Capital or SVB Securities. SVB Group also owns $3.7 billion in preferred stock. William Kosturos, chief restructuring officer at SVB Group, said SVB Group aimed to deploy a court-supervised process to assess strategic options for SVB Capital, SVB Securities and their other assets, adding:
"The Chapter 11 process will enable SVB Financial Group to preserve value as it evaluates strategic options for its key businesses and assets, particularly SVB Capital and SVB Securities." Kosturos emphasized that SVB Capital and SVB Securities will continue to operate and serve clients under the leadership of their independent teams.
The ongoing SVB crisis has created a lot of uncertainty not only in the traditional banking system, but also in some cryptocurrency markets. Circle, operator of major stablecoin USDC
After SVB closed its operations on March 8, $3.3 billion, or about 8% of its reserves, was pegged to SVB. As a result of these events, USDC briefly de-pegged, dropping to $0.87, before re-pegging amid reports of the SVB resolution. On March 13, the banking giant HSBC officially announced that its subsidiary HSBC Bank of the United Kingdom has acquired the British Silicon Valley Bank at a price of 1 pound ($1.2). HSBC group chief executive Noel Quinn said the acquisition made "excellent strategic sense" for HSBC's UK business, strengthening its business banking business.
