Plea of Tim Mayopoulos, head of Silicon Valley Bridge Bank, comes as large banks reportedly see an influx of funds after SVB's collapse last week, the largest US bank failure since 2008.
The head of Silicon Valley Bridge Bank, created by US regulators to succeed Silicon Valley Bank [SVB] after it collapsed, has urged fleeing depositors to return with their money, as large banks see an influx of funds.
"The number one thing you can do to support the future of this institution is to help us rebuild our deposit base," chief executive Tim Mayopoulos said in a statement on Tuesday, "both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days."
He added, "We are doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy."
The Federal Deposit Insurance Corporation [FDIC] has said it will cover all SVB depositors, including beyond the usual cap of $250,000 for FDIC protection.
"We are making new loans and fully honouring existing credit facilities," Mayopoulos said.
SVB was a major lender for startups, serving as banking partner for nearly half of US venture-backed technology and healthcare companies that listed on stock markets in 2022.
Last week, more than 650 funds signed a letter vowing to keep working with the bank if it found a new buyer.
SVB's failure on Friday, the largest US bank failure since 2008, was preceded on Wednesday by the liquidation of Silvergate Bank, a small regional institution favoured by the cryptocurrency community.
On Sunday, authorities also forced Signature Bank, the nation's 21st largest bank, to close.
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‘Business as usual’ - Silicon Valley Bank’s new CEO Tim Mayopoulos writes a letter to clients. Letter adds, ‘Cross-border transactions are expected to continue in the coming few days. Depositors now have full access to their money’ #SVB pic.twitter.com/IcqSvKLKT3— Priyanshi Sharma (@Priyanshi50) March 14, 2023
Flight to big banks
Larger banks including JPMorgan Chase and Bank of America have since seen an influx of customers, according to two sources close to the industry.
One added that while the larger institutions are not actively pursuing leads from the closed banks, they are accepting their deposits, which is a large sum.
Clients from small and medium-sized banks have also probably transferred all or part of their funds "into major players, that people think there is no way the government will let go down," said analyst Alexander Yokum, a regional banking specialist at CFRA.
The extent of the transfers will probably only be known when banks publish their quarterly results beginning in April, or if they publish an interim report before then, Yokum said.
In a note, S&P Global Ratings said it has "not seen evidence that the unmanageable deposit outflows experienced at a few banks have widely spread" to others.
In a joint statement on Sunday, the US Federal Reserve, the FDIC and the Treasury Department said SVB depositors would have access to "all of their money" starting on Monday.
The Fed also announced it would make extra funding available to banks to help them meet the needs of depositors, which would include withdrawals.
S&P said it believes that the Federal Reserve measures "have equipped banks with additional liquidity sources if needed and probably also lowered the odds that confidence-sensitivity issues become relevant for a large number of banks."
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