On client call, new SVB CEO focuses on VCs, startup ties

three days into his tenure Silicon Valley Banka government-appointed chief executive, Tim Mayopoulos Has a message for his powerful VC and startup clients: Get your money back.

This is consistent throughout Mayopoulos’ answers as he answered over 400 questions from relevant customers in 30 minutes soaring Call Wednesday.

“There is no safer place in the U.S. banking system to keep your deposits than this,” Mayopoulos said on a conference call that CNBC participated in and first reported.He urged customers to return funds to their banks and promptly alert their relations teams to any issues with incoming and outgoing wire transfers, a concern for many business executives who cannot withdraw their deposits from their banks. last week.

Mayopoulos joins SVB Director of Operations Phil Cox, the only remaining executive on the core executive team. Mayopoulos said on the conference call that SVB’s former chief executive and chief financial officer are no longer employed by the bank.

While Mayopoulos is making requests to current and former clients, it’s unclear how long he will stay in his current job because the bank is currently controlled by the FDIC. Mayopoulos said he did not know what the “exact end state” of SVB would look like, listing three possibilities: recapitalization, sale or liquidation.

The recapitalization will allow SVB to continue as an independent entity. But that possibility depends on another financial institution or investor group coming forward.

“I know I’m new here,” Mayopoulos responded directly from The venture capital company“You have been patient with us as we have gone through some operational difficulties. I just want to give us a chance to regain your trust and confidence.”

Mayopoulos’ pitch was tailored to the hordes of venture capitalists who took to social media to express their shock and dismay. collapse A storied Silicon Valley institution. On the call, Mayopoulos repeatedly referred to the “innovation economy,” and the startup ecosystem in which “Silicon Valley plays a big role.”

Mayopoulos said on the conference call that customer feedback will be critical in determining the future of the bank. Input “from customers, venture capital and the startup community” will set the timetable for when SVB will eventually emerge from government control.

“One of the things I want to tell you is that you have some agency on this and you can actually vote and at least send a clear signal of what you want the outcome of this process to be,” the CEO said in his statement. said in the speech. Prepared remarks. “Should our clients choose to withdraw their deposits and deposit them with other institutions, this would obviously limit our range of options with regard to the final outcome.”

SVB’s long-term partnerships with Silicon Valley’s most elite venture capital firms are mutually beneficial.

From its founding at the poker tables to its near-fatal bank run last week, SVB is focused on taking risks in markets most traditional banks shy away from. SVB has found a niche in the venture debt space, funding companies that need cash infusions, especially between funding rounds.

In exchange for future consideration, usually equity or warrants in the company, SVB has become a massive player in the venture debt space, expanding from software and the internet to life sciences and robotics.

Across its more than 40 businesses, SVB has grown with its savers, building a lucrative mortgage business and a suite of private banking products that have enabled it to retain and attract founders whose banks helped build their wealth.

From traditional players like Cisco to more modern tech companies like DocuSign and Roku, SVB has focused on provide financing And banking services for every stage of growth.

“There are other places to do venture debt, but Silicon Valley Bank is the 1,000-pound gorilla in the room,” says AmicasarBusiness Lending Consultant CEO Multiple funding.

The exclusivity contract, the ironclad promise that the company will keep all of its funds with SVB, is a key aspect of these financing deals.When SVB fails, it chaotic start-up Trade flexibility in banking for liquidity.Some fled the bank, breaking their covenant to keep their lights on, theypaycheck scroll.

Asked about the potential exclusivity violation, Mayopoulos said he understands the urgency the startup is taking.

“Given the changing circumstances and what the FDIC is doing with insurance coverage, we’re very keen to work with our customers to have those deposits returned to us,” the CEO said by phone.

Returning customers don’t have to worry about any consequences of breaching their covenants, Mayopoulos suggested. He did not say what would happen to former clients who did so.

— CNBC’s Cat Clifford contributed to this report.

Source link

Leave a Comment