The Silicon Valley Bank thing

Editor: Lotte sent out and forgot to bring your mobile phone to sort out.

Being hyped as a hit, I personally find it a bit interesting. Many of the rich people of China's generation who started with the reform dividend have money there, and the specific purpose and motivation are unknown. I believe that people older than us have experienced the trendy children of that era (nouveau riche of that era), and they want to hide their money in a safer place. So let's talk about the bank chosen by the trendmakers, Silicon Valley Bank. After all, Xiaobian is an optimist, often forgets to take his mobile phone out, and has not yet touched this bank. I estimate that there are many individuals and enterprises that continue to come out later than Pan's savings, and it must continue to ferment for a period of time, and netizens can bet with the editor. Let's talk about Silicon Valley Bank.

Founded in the United States in 1983, Silicon Valley Bank is a subsidiary of Silicon Valley Bank Financial Group, with assets of $5 billion, and through 27 offices in the United States, 3 international branches and an extensive network of business relationships in Asia, Europe, India and Israel, Silicon Valley Bank has provided $2.6 billion in loans to venture capital and startups. Star Bank on Forbes' annual Best U.S. Banks list for five consecutive years. Ranked 20th on Forbes' annual list of America's best banks, it had assets of $209 billion and total deposits of about $175.4 billion at the end of 2022. This deposit amount is up to the total amount owed by a certain Chinese university last year.

So how did Silicon Valley Bank grow from $5 billion in 1983 to $209 billion in assets, let's take a look at the business of Silicon Valley Bank. Its business is to issue loans to early-stage start-ups and collect higher interest rates, and obtain part of the company's stock options or options through agreements; Equity or options held by the parent company, Silicon Valley Bank Financial Group, and the option is exercised to profit when the business goes public or is acquired; For promising startups, Silicon Silver Group will also let its Silicon Silver Venture Capital intervene in the form of venture capital to obtain capital appreciation. It seems that Silicon Valley Bank has a good future, and has always followed an equity and venture capital model, which is mutually beneficial for startups and technology companies. So where did those mounds come into contact and hide their money so that they are now on the cusp of being put on the cusp of Silicon Valley or in China? If it is in China, then how did he come about, foreign banks want to come to China to be restricted by financial licenses? The editor has spent a lot of effort to collect the following information:

On December 21, 2010, Shanghai Pudong Development Bank announced in the evening that on December 18, the company signed the "Promoter Agreement" with the Bank of Silicon Valley with the United States, intending to establish a joint venture bank focusing on serving technology-based small and medium-sized enterprises in China. As a test of the Chinese market, in 2008, Silicon Valley Bank first targeted the guarantee business and invested in Zhejiang Zhongxin Lihe Guarantee Co., Ltd. In 2009, through cooperation with Shanghai Yangpu District, Silicon Valley Bank successfully obtained the stepping stone to further penetrate the Chinese market, established a Shanghai office, and helped the Yangpu District Government manage several funds. During the visit of then California Governor Schwarzenegger to Shanghai, Silicon Valley Bank signed a series of framework agreements with the Shanghai Municipal Financial Office and the Shanghai Yangpu District Government to promote high-tech venture capital. However, relevant people from Silicon Valley Bank said in an interview with the media that due to the restrictions of financial licenses, Silicon Valley Bank has not been able to carry out enough business in China.

On the evening of October 20, 2011, Shanghai Pudong Development Bank officially announced that it was approved by the China Banking Regulatory Commission to establish a Sino-foreign joint venture bank "Pudong Development Silicon Valley Bank Co., Ltd." in Shanghai with Silicon Valley Bank Co., Ltd., which will be the first "technology bank" with independent legal person status in China. On August 15, 2012, SPD Silicon Valley Bank officially opened, headquartered in Yangpu District, Shanghai. SPD Silicon Valley Bank has a registered capital of RMB 1 billion, and both SPD and SVB each hold 50% of the equity. Mr. Fu Jianhua, former vice chairman and president of SPD Bank, became the chairman of SPD Silicon Valley Bank, and the president was personally served by Mr. Ken Wilcox, the current chairman of Silicon Valley Bank of America. On December 1, 2010, Hankou Bank's Technology Financial Service Center was officially launched in Wuhan Optics Valley, marking that Hankou Bank has taken a new step in actively practicing the concept of "first mover and first pilot", taking the initiative to develop technology finance, focusing on financial innovation, and committed to building a "China Silicon Valley Bank". The so-called "China Silicon Valley Bank" is Hankou Bank's response to the financial service needs of science and technology enterprises in Wuhan, especially in the East Lake National Independent Innovation Demonstration Zone, actively learning from the experience and model of Silicon Valley Bank with international influence in serving science and technology enterprises, combining reality, bold innovation, first implementation and first trial, building a new platform, developing new products, forming new mechanisms, cultivating new models, solving "financing difficulties", and building its own distinctive technology financial service brand while supporting the development of science and technology enterprises.

On August 15, 2012, SPD Silicon Valley Bank, a joint venture bank focusing on serving the technology innovation industry, was established in Shanghai. The two major shareholders, Shanghai Pudong Development Bank Co., Ltd. and Silicon Valley Bank Co., Ltd., each hold 50% of the shares. SPD Silicon Valley Bank was approved by the China Banking Regulatory Commission in October 2011 and passed the acceptance inspection in June 2012. Mr. Fu Jianhua, former vice chairman and president of SPD Bank, became the chairman of SPD Silicon Valley Bank, and the president was personally served by Mr. Ken Wilcox, the current chairman of Silicon Valley Bank of America. Among the newly established joint venture banks, SPD Bank and Silicon Valley Bank will play complementary advantages in terms of resources, markets and talents, not only have international experience, but also be able to take root in the Chinese market. SPD Silicon Valley Bank will focus on serving innovative enterprises, and its advantages include: providing financial support for technological innovation enterprises through the evaluation model of innovative asset value; Tailor-made financial service solutions to meet the needs of enterprises at all stages of development; Provide a global cooperation platform to build a bridge for the development of domestic enterprises to overseas markets.

It is the first approved joint venture bank since 2007 and the first "technology bank" in China to have independent legal personality. This is the point, to test, a 16th-ranked bank in the United States can become the first joint venture bank in China, the top 15. The editor was not convinced and encyclopedia its chairman, this person's business level is still quite high, it is not convenient to evaluate the individual here. So since SPD Silicon Valley Bank has developed so well in China, Silicon Valley Bank, as the parent company, should develop better, how did it get to this point?

As the 16th largest bank in the United States, Silicon Valley Bank is the main financial channel between the tech industry, start-ups and tech workers. But it is precisely the connection to the tech industry that makes it troublesome. Tech stocks have been hit hard over the past 18 months, with the industry cutting jobs and venture capital funding declining. At the same time, the bank has been hit hard by the Fed's fight against inflation, as well as a series of aggressive rate hikes to cool the economy. As the Fed raised its benchmark interest rate, the value of generally stable bonds began to fall. This is usually not a problem, but when depositors become anxious and start withdrawing money, banks sometimes have to sell these bonds before they mature to make up for outflows.

This is exactly what happened to Silicon Valley Bank, but on the 8th of this month, Moody's downgraded the rating of Silicon Valley Bank Financial Group and its banking subsidiary. Following the downgrade, the rating outlook for Silicon Valley Bank Financial Group and Silicon Valley Bank changed from "stable" to "negative." The bank had to sell $21 billion in highly liquid assets to cover sudden withdrawals, and that transaction lost $1.8 billion. But the news completely exposed the bank's woes. On the 9th, investors and depositors tried to withdraw 42 billion from Silicon Valley Bank

dollar, which is one of the biggest bank runs in the United States in more than 10 years. Silicon Valley Bank shares plunged 60% in one day to close at $106.04, and plunged 68% on the 10th, entering a state of suspension. Forced to stop trading.

As you can predict, what is the situation when the bank announces that it will stop trading? This is God's operation. According to the analysis of the analysis of Silicon Valley Bank, the closure highlights the negative impact of aggressive interest rate hikes by the US Federal Reserve. Silicon Valley banking focuses on areas such as technology and venture capital, and relies less on individual depositors than traditional banks. The Fed's aggressive interest rate hikes have led to a fall in bond prices, a rapid loss of deposits in commercial banks, and an increase in financing costs. Against this backdrop, Silicon Valley Bank was not prepared to lead to the current predicament. Silicon Valley Bank is not alone in this dilemma. The Federal Savings Insurance Corporation has previously warned that the current interest rate environment could have serious consequences for the banking sector, with financial institutions such as U.S. commercial banks likely to face losses totaling $620 billion from selling or holding a variety of financial products.

On the 10th local time, the Federal Deposit Insurance Corporation (FDIC) issued an announcement that Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation on the 10th, and designated the Federal Deposit Insurance Corporation as the receiver. Silicon Valley Bank's head office and all branches will reopen on the 13th.

Less than two weeks before Silicon Valley Bank disclosed massive losses, Greg Becker, CEO of Silicon Valley Bank, sold $3.6 million of company stock under a trading plan. Sure enough, the dead Taoist friend is not dead and poor.

After the closure of Silicon Valley Bank, most investors must be worried that this incident could spill over into other financial institutions and even lead to larger financial risks.

To get back to business, the incident really began to spread and ferment. The bankruptcy of Silicon Valley Bank may affect many giants.

　　According to Roku, a U.S. streaming service, 26 percent of its cash reserves are held in Silicon Valley banks and most of them are uninsured. Stablecoin giant Circle said that of the company's roughly $40 billion USD Coin reserves, $3.3 billion is in Silicon Valley banks. Roblox, the "first stock in the metaverse," said 5% of its $3 billion in cash is held in Silicon Valley Bank. On the 10th, the stocks of the US banking industry plunged collectively, and the stock prices of the four major banks of JPMorgan Chase, Bank of America, Wells Fargo and Citigroup fell sharply, and the total market value lost about $50 billion. On the 11th, the Nasdaq index fell nearly 200 points, or 1.76%; The Dow Jones fell below the 32,000-point integer mark, or 1.07%. The Federal Deposit Insurance Corporation said on the 10th that in order to protect insured depositors, a special agency has been set up to receive insured deposits from Silicon Valley banks, and will allow policyholders to withdraw deposits before the morning of the 13th. For uninsured depositors, dividends will be paid as compensation. The Federal Deposit Insurance Corporation will insure each depositor with $250,000, but most of Silicon Valley savers are businesses with deposits above that amount, including a large number of startups.

The end continues... The editor continues to accompany the gods to see if you can cut these gods as leeks once, save 2.5 billion and pay 250,000, wait and see.