SVB has not had an official chief risk officer for 8 months

Silicon Valley Bank, a lender that has been a fixture in the venture capital space for decades, collapsed on Friday. The California Department of Financial Protection and Innovation closed SVB and named the FDIC as receiver. The turmoil began on Wednesday after SVB suddenly announced plans to raise billions in capital in covering large losses, which caused widespread panic among investors and the tech founders they backed. The company’s shares fell to about 60% on Thursday trading, another 20% in aftermarket trading, and stopped at the open on Friday. Hours later, amid reports that SVB was struggling to attract buyers in a sale, the government took control. In the course of all this, SVB’s proxy statement, filed earlier this month, revealed that the company’s chief risk officer left his role early last year, and the bank did not hire a replacement until last January.

Laura Izurieta resigned from her role as CRO of SVB Financial Group in April 2022, and formally left the company in October, according to a SVB proxy filing. The bank appointed his permanent successor as CRO, Kim Olson, in January this year.

It is not clear how the bank will manage the risks in the interim period between the departure of one CRO and the appointment of another. SVB representatives did not return calls luckThis is a request for comment.

A risk officer typically anticipates and manages regulatory, operational, competitive or other risks facing a company. SVB’s chief risk officer reports directly to a “Risk Committee,” which includes chairmen of SVB’s Board and all Board committees, in addition to the chief executive officer, according to filings from the company. The committee is responsible for hiring, evaluating and terminating the CRO, and in 2023, will consist of seven members.

Silicon Valley Bank does not have an official Chief Risk Officer during a difficult transition in the venture capital market-the industry that SVB services very closely. At the beginning of 2022, as interest began to rise, the venture capitalists pulled back and slowed their deal-making pace, leaving the tech companies they back with less capital to run their businesses. That directly influenced Silicon Valley Bank’s deposits.

SVB is an important part of the tech world, which has been rocked by several layoffs in the past year. It says it has relationships with about 50% of America’s venture capital-backed companies, making the impact of its failure potentially far-reaching. Some financial institutions felt a tremor from the fall of SVB, and Signature Bankprominent in the crypto world, has seen its shares fall more than 30% while shares of First Republic, a regional bank, fell at 23% at noon on Friday. Bill Ackman, founder of Pershing Square Capital Management, warned Thursday that SVB’s collapse would be another case of an institution “too big to fail,” urged the government to consider bailing it out.

The sudden rush to the safety of investors was so intense that the SVB from a market cap of more than $15 billion to seize the FDIC within days.

The FDIC released a statement that the SVB customers have access of their insured deposits on Monday, March 13. But how customers will recover their uninsured deposits is still unclear.

Jessica Mathews contributed reporting

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *