The Silicon Valley Bank Run

As you all know, on March 10th, 2023, Silicon Valley Bank (SVB) became the largest bank fail since 2008. While the week following the news was a hectic one, we had confidence that the situation was going to be handled swiftly from the get-go. This has certainly been validated as the cash is secure and answers have been provided. It was crucial that we had this trust as we take our clients through one step at a time.  

Our Clients 

Our clients alone had a 40 million dollar exposure at the onset and we have been working alongside them to provide support. While there are still uncertainties, our team has been providing immediate and ongoing support to our clients. This includes validating payment details with vendors, setting up separate accounts, implementing appropriate controls with the different institutions, and making sure there is clear communication with customers, vendors, and the team. Not all of our clients have been directly impacted, and we have been working with them as well to establish additional accounts and redundancies. We are also having all our clients take more conservative steps to make sure excess deposits are still secured and that the exposure is within our clients’ risk appetite.  

What is the Current State? 

As of Monday, March 27th, SVB is a division of First Citizens Bank. It was acquired for about 72 Billion dollars and the 17 former SVB branches are now “First-Citizen Bank & Trust Company.” The FDIC limits have also returned to normal values and operations are still fully functioning. Unfortunately, we still do not have a full line of sight as to what the changes will be, however, the environment has changed such that we have confidence that the assets are secure. This doesn’t take away from the steps we are taking to create proper redundancies within our  systems. 

The Takeaways 

We have learned so much over the course of this past month, particularly, the importance of financial preparation in the event that this happens again. Here are a few pieces of advice from the team: 

• Assure that cash outside of your 3-6 month runway is put to work through money market mutual funds within the FDIC limit or through secure means (e.g. treasury bills) 

• Maintain confidence in the banking system while reasonably deploying capital 

• Have additional accounts in place with proper redundancies across operations 

• Implement robust controls and risk management practices in your organization 

• If you have any doubts, questions, or concerns, turn to a trusted financial advisor. Luckily we know some pretty cool ones.