Silicon Valley Bank

Silicon Valley Bank
Company type	Subsidiary
Industry	Commercial banking, Financial services
Founded	October 17, 1983; 43 years ago in San Jose, California, United States
Founder	Bill Biggerstaff, Robert Medearis
Defunct	March 10, 2023
Fate	Failed and taken over by California Department of Financial Protection and Innovation; assets acquired by First Citizens BancShares
Successor	First Citizens BancShares (commercial banking arm)
Headquarters	Santa Clara, United States
Area served	United States (15 states), international regions including Canada, Cayman Islands, China, Hong Kong, India, Ireland, Israel, Sweden, Denmark, Germany, United Kingdom
Key people	Greg Becker (CEO from 2011)
Products	Commercial banking services specialized for technology startups and venture-backed companies
Parent	First Citizens BancShares (after March 2023)

Silicon Valley Bank (SVB) operates as a commercial banking arm under First Citizens BancShares. Previously, it was the principal subsidiary of SVB Financial Group, a publicly listed bank holding company, with operations spanning 15 U.S. states and several international regions.

Located in Santa Clara, California, SVB concentrated on financial solutions customized for the technology sector. It emerged as the largest depository institution within Silicon Valley, catering to nearly 50% of venture-backed technology startups.

Amid the Federal Reserve's interest rate increases during the 2021–2023 inflationary period, SVB encountered a bank run in March 2023. This led to its failure and subsequent takeover on March 10 by the California Department of Financial Protection and Innovation (DFPI). Due to liquidity shortages and insolvency concerns, the FDIC was appointed as receiver.

This collapse represented the second-largest bank failure in U.S. history at that moment, later eclipsed by the downfall of First Republic Bank amid the banking turmoil of March 2023.

On March 12, 2023, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and FDIC Chair Martin Gruenberg jointly declared that all SVB depositors would receive full protection, inclusive of uninsured deposits, effective from March 13. The FDIC created a bridge bank named Silicon Valley Bridge Bank, N.A. to ensure continuity of operations.

Subsequently, on March 27, 2023, First Citizens Bank & Trust Company—a subsidiary of First Citizens BancShares—purchased all customer deposits and loans from Silicon Valley Bridge Bank through the FDIC and assumed control over all SVB branch locations.

Foundation and early growth

Established in 1983 by Bill Biggerstaff, a Wells Fargo executive, and Stanford professor Robert Medearis, Silicon Valley Bank was created to serve startup enterprises. The concept originated during a poker game between these two former Bank of America managers. They appointed Roger V. Smith, formerly leading Wells Fargo’s high-tech lending division, as the inaugural CEO and president. Officially launched on October 17, 1983, as a subsidiary of Silicon Valley Bancshares (now SVB Financial Group), the bank attracted an initial group of 100 investors including NFL quarterback Jim Plunkett. To bolster its reputation with venture capitalists, former U.S. representative Pete McCloskey joined its board. The first branch was established in San Jose, California.

At a time when traditional banks lacked insight into startup dynamics, Silicon Valley Bank innovated by structuring loans that accounted for startups’ frequent absence of immediate revenue streams, evaluating risk based on business models rather than current income. It cultivated relationships with venture capitalists, legal firms, and accounting professionals to support its clientele. The bank’s strategy focused on gathering deposits from venture-backed companies and broadening its services to retain clients throughout their growth phases. Initially, founders were required to pledge roughly half their equity as loan collateral; this requirement decreased to about seven percent as startup failure rates lessened and founders repaid loans to preserve ownership stakes. Loan losses were mitigated through selling pledged shares to investors. Venture capital firms often mandated startups to maintain accounts with Silicon Valley Bank, which prioritized clients backed by leading venture capital firms such as Sequoia Capital and Kleiner Perkins to minimize risk exposure.

Throughout the 1980s, SVB expanded alongside the regional technology industry, achieving profitability over 21 consecutive quarters and improving earnings from a $39,000 loss in 1985 to $12.3 million by 1991. In 1986, SVB acquired National InterCity Bank of Santa Clara and inaugurated its first East Coast office in 1990 near Boston’s Route 128 technology corridor.

Under Smith’s guidance, the bank ventured into higher-risk real estate lending—comprising half its portfolio by the early 1990s—but suffered a $2.2 million loss in 1992 following a market downturn; this exposure was reduced to 10% by 1995. Leadership transitioned in 1993 when John C. Dean became CEO while Smith assumed the role of vice chairman. Additionally, starting in 1994, SVB diversified into lending for wineries.

Expansion

The dot-com era spurred remarkable growth for the bank, which gained recognition for financing venture-stage startups, often operating at a loss. By 1995, its clientele included prominent technology companies such as Cisco Systems and Bay Networks. That same year, the bank relocated its headquarters from San Jose to Santa Clara. While the holding company's stock value climbed sharply during the bubble, it plummeted by half following the bubble's collapse. SVB grew its branch network across major technology centers throughout the United States. In 2000, Ken Wilcox assumed the role of CEO and continued to prioritize services for technology enterprises rather than expanding into general commercial banking.

SVB officially launched private banking services in 2002, capitalizing on its connections with affluent venture capitalists and entrepreneurs. By 2003, it was sponsoring international trade delegations to cities including Bangalore, Mumbai, Tel Aviv, Shanghai, and Beijing, laying groundwork for its global footprint. The following year, SVB established operations in Bangalore, London, Beijing, and Israel.

Amid the 2008 financial downturn, SVB Financial Group obtained $235 million from the federal Troubled Asset Relief Program (TARP), paying $10 million in dividends before buying back the government's shares through a $300 million stock offering. Greg Becker took over as CEO from Wilcox in April 2011.

In 2012, SVB collaborated with Shanghai Pudong Development Bank to create SPD Silicon Valley Bank in Shanghai, aimed at supporting local technology startups. This joint venture was one of the few American-owned banks authorized to conduct business in renminbi (RMB). Additionally, SVB managed yuan-denominated funds for Shanghai’s Yangpu District and invested in a loan guarantee company based in Hangzhou.

By 2015, SVB was serving approximately 65% of U.S.-based startups. Its range of products included syndicated lending and foreign exchange management; it stood out as the sole U.S. bank working with virtual currency startups at that time. In 2016, SVB backed Stripe’s Atlas initiative designed to simplify startup incorporation within the United States.

SVB’s involvement in financing startup acquisitions provided it with privileged information; however, in June 2021, former senior vice president Mounir Gad admitted guilt to insider trading offenses connected to acquisition tips from 2015 and 2016.

Business model

The bank’s clientele primarily comprised companies and individuals in sectors such as technology, life sciences, healthcare, private equity, venture capital, and premium wine industries. It maintained a strong focus on early-stage and venture-backed startups along with emerging entrepreneurs and investors. Notably influential among Indian startups, it uniquely catered to C corporations whose founders did not possess Social Security numbers. Despite concentrating on tech clients, the bank faced criticism for its outdated technological infrastructure and absence of biometric security measures.

As of December 2022, loans secured by limited partner commitments to venture capital and private equity firms represented 56% of its loan portfolio. Mortgages extended to high-net-worth individuals made up 14%, while loans to technology and healthcare companies accounted for 24%, including 9% directed at early- and growth-stage startups. Borrowers were typically required to maintain exclusive banking relationships with SVB.

In February 2023, Forbes placed the bank at number 20 on its list of "America's Best Banks," highlighting a return on equity of 13.8%. Moody’s described its loan portfolio as conservative and well-performing; overseas subsidiaries held deposits totaling $13.9 billion. The bank's profitability strategy hinged on maintaining a "high interest margin," catering particularly to venture capital firms seeking liquidity. Fortune magazine characterized this approach as “chasing yield” in October 2024—a factor implicated in the institution’s eventual failure.

Financials in billions of U.S. dollars
	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Revenue	0.529	0.664	0.591	0.529	0.710	0.947	0.985	1.403	1.464	1.520	1.650	2.022	2.715	3.530	4.082	6.027	7.401
Net income	0.089	0.120	0.074	0.048	0.095	0.172	0.175	0.216	0.264	0.344	0.383	0.491	0.974	1.137	1.191	1 .770	1 .509
Assets	6 .081	6 .692	10 .02	12 .84	17 .53	19 .97	22 .77	26 .42	39 .34	44 .69	44 .68	51 .21	56 .93	71 .00	115 .5	211 .3	211 .8
Deposits	4 .058	4 .611	7 .473	10 .33	14 .34	16 .71	19 .18	22 .47	34 .34	39 .14	38 .98	44 .25	49 .33	61 .76	102 .0	189 .2	173 .1
• incl. noninterest-bearing	3 .040	3 .227	4 .420	6 .299	9 .012	11 .86	13 .88	15 .89	24 .58	30 .87	31 .98	36 .66	39 .10	40 .84	66 .52	125 .9	80 .75
Total equity	0 .629	0 .677	0 .991	1 .128	1 .274	1 .569	1 .831	1 .966	2 .818	3 .198	3 .643	4 .180	5 .116	6 .470	8 .220	16 .24	16 . 00

Facilities

Silicon Valley Bank's main operations were headquartered in Santa Clara, California, supported by an additional office located in Tempe, Arizona. Its parent company, SVB Financial Group, managed subsidiaries that delivered investment and private banking services from international locations including Canada (Toronto), the Cayman Islands, China (Beijing, Shanghai, Shenzhen), Hong Kong, India (Bangalore), Ireland, Israel (Tel Aviv), Sweden (Stockholm), Denmark (Copenhagen), Germany (Frankfurt), as well as other nations within the European Union. Commercial banking activities were conducted through its branch in the United Kingdom (London).

The Santa Clara headquarters served as the principal tenant of The Quad at Tasman, a complex comprising seven office buildings, with a lease scheduled to conclude on September 30, 2024. In addition, Silicon Valley Bank maintained 17 branch offices across California and Massachusetts, while its holding company operated 55 locations throughout the United States.

Affiliations and community involvement

As a member of the Federal Reserve System, Silicon Valley Bank's CEO held a class A position on the Board of Directors for the Federal Reserve Bank of San Francisco. The bank was affiliated with prominent industry groups such as TechNet, the Silicon Valley Leadership Group, the Bay Area Council, Tech:NYC, the Mid-Size Bank Coalition of America, and the American Bankers Association. During its expansion into India, it collaborated with the nonprofit mentoring organization TiE starting in the late 1990s.

In 1995, Silicon Valley Bank founded the Silicon Valley Bank Foundation to oversee its corporate social responsibility initiatives. This foundation was fully financed by the bank, with donations reaching $100,000 by 1998. The bank also became a co-title sponsor in 2015 of EF Education–Tibco–SVB, a professional women's cycling team.

Since 2002, Silicon Valley Bank had extended more than $2 billion in loans and investments aimed at developers specializing in affordable housing projects within Silicon Valley, San Francisco, and Massachusetts—an effort bolstered by its acquisition of Boston Private in 2021. This acquisition further enabled the provision of complimentary banking services to numerous nonprofit organizations located in San Mateo County, California.

Collapse

In 2022, Silicon Valley Bank (SVB) encountered significant financial setbacks due to increasing interest rates combined with a downturn in the technology sector, which heavily impacted its holdings in long-term Treasury bonds. By December 31, 2022, SVB reported unrealized losses exceeding $15 billion on securities classified as held to maturity. Early March 2023 saw the bank's collapse triggered by inadequate risk management alongside a bank run driven by the tech industry. Rapid deposit withdrawals were intensified by social media activity, leading to demands for regulatory safeguards for uninsured accounts.

On March 10, 2023, examinations conducted by Federal Reserve and FDIC officials reviewed SVB’s financial condition. The California Department of Financial Protection and Innovation intervened due to insolvency and liquidity deficiencies, placing the FDIC in charge as receiver. To protect insured depositors, the FDIC reopened SVB branches under the Deposit Insurance National Bank of Santa Clara. Amidst this turmoil, CEO Greg Becker stepped down from his role on the Federal Reserve Bank of San Francisco board.

An initial auction for SVB’s assets held on March 12 attracted only one undisclosed bidder; notable banks including PNC and RBC withdrew their interest. The FDIC declined this offer and scheduled a second auction after designating SVB as a systemic risk institution—thereby ensuring full insurance coverage for all deposits.

On March 13, the FDIC transferred SVB’s assets to Silicon Valley Bridge Bank, N.A., appointing Tim Mayopoulos as CEO. This bridge bank operated under FDIC oversight and continued standard banking services for customers but did not extend protections to shareholders or unsecured creditors.

Regulatory disclosures revealed that more than 85% of SVB’s deposits were uninsured at failure. Its collapse represented the largest U.S. bank failure since 2008 and ranked second historically after Washington Mutual. While SVB’s Chinese joint venture remained stable, efforts were underway by the UK government to support British technology companies affected by SVB's UK branch closure. On March 13, HSBC UK acquired Silicon Valley Bank UK for £1 in a rescue transaction that safeguarded depositors without taxpayer expense.

On March 17, SVB Financial Group filed for Chapter 11 bankruptcy protection; however, subsidiaries such as SVB Capital and SVB Securities were excluded from this filing. The bank’s failure caused considerable disruption across global startup ecosystems.

A Federal Reserve report led by Vice Chair Michael Barr highlighted regulatory shortcomings exposed by SVB’s collapse and recommended reforms aimed at mitigating contagion risks.

On March 26, the FDIC announced that First Citizens BancShares would acquire SVB’s commercial banking division. This transaction encompassed roughly $119 billion in deposits and $72 billion in loans—discounted by $16.5 billion—with approximately $90 billion in securities remaining under receivership. Following this acquisition, SVB’s 17 branches reopened as "Silicon Valley Bank, a division of First Citizens Bank," with all depositors transitioned accordingly. The deal elevated First Citizens from being ranked as the 30th-largest U.S. bank by assets into one of the top 20 institutions nationwide.