NYCB - SVB Financial cut off from records due to FDIC takeover - report

2023-03-20 07:27:48 ET

SVB Financial ( NASDAQ: SIVB ), the parent of Silicon Valley Bank, can no longer access its financial records after the bank was taken over by the Federal Deposit Insurance Corp. (FDIC) on March 10. With the parent unable to access its primary source of liquidity and most of its business structure, SVB Finanical was forced into Chapter 11 bankruptcy proceedings a week later, Reuters reported Monday, citing court documents.

SVB Financial ( SIVB ) is exploring options, including a potential sale, for its investment banking and venture capital businesses, which aren't part of the bank takeover. Given the breakdown in cooperation between the bridge bank set up to take over SVB's business and the parent, the Chapter 11 proceedings have gotten off to a "challenging" start, SVB Financial Chief Restructuring Officer Wiliam Kosturos said in a declaration filed in U.S.  bankruptcy court Sunday, according to Reuters.

The parent has no employees of its own. The bridge bank's employees have "cut off access" to a large part of SVB Financial's ( SIVB ) "books, records, files, electronic systems and key employees," Kosturos said in the filing. He and SVB Financial are working to re-establish access.

According to its court filings, SVB Financial ( SIVB ) had $19B in assets, $2.2B in cash and cash equivalents, and $3.4B in liablities. About $15.5B of the company's asset value was attributed to the Silicon Valley Bank operations that were seized by regulators.

The venture capital and credit investment unit of the company, SVB Capital, manages ~$9.5B in other investors' money across 30 pooled investment funds, according to Kosuturos's declaration.

On Friday, the Financial Times reported that the FDIC was open to consider loss-sharing to smooth the sale process of  Silicon Valley Bank and Signature Bank ( SBNY ). On Sunday, New York Community Bancorp's ( NYCB ) Flagstar Bank agreed to acquire Signature's deposits and some of its loans.

See more coverage on Silicon Valley Bank :

• SVB Financial’s Silicon Valley Bank fails as FDIC takes over
• Silicon Valley Bank depositors to have access to all funds on Monday
• Silicon Valley Bank CEO sold $3.6M of stock two weeks before bank failed
• Federal Reserve to review its oversight of Silicon Valley Bank led by Michael Barr
• SVB Financial, top executives sued by shareholders

Related analysis:

• 3 Financials On My Watchlist After Silicon Valley Bank's Detonation
• SVB Financial Group And Lehman Brothers: What Is In Common And What Isn't?

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