Silicon Valley Bank: the spectacular unravelling of the tech industry’s banker

Silicon Valley Bank spectacularly unravelled after customers initiated withdrawals of $42bn in a single day. SVB had been at risk since 2021, when it received a flood of money and invested in long-term government-backed securities.

March 14, 2023 . 4:37 AM

1 min read

Silicon Valley Bank (SVB) collapsed in a single day after customers initiated withdrawals of $42bn - a quarter of its total deposits.
SVB had been at risk since 2021, when it received a flood of money and invested in $120bn of highly-rated government-backed securities.
The bank's strategy shift in 2017 to invest in longer-term bonds in order to appease shareholders exposed it to losses if interest rates rose quickly.
The collapse has had a ripple effect on the tech industry, sparking scrutiny of its approach to risk management.
SVB committed a cardinal sin in finance by absorbing enormous risks with only a modest potential pay-off in order to bolster short-term profits.