SVB Financial Group (SVB or SVBFG) is a

financial services Financial services are service (economics), economic services tied to finance provided by financial institutions. Financial services encompass a broad range of tertiary sector of the economy, service sector activities, especially as concerns finan ...

holding company headquartered in

New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...

. The company's main business unit was the

commercial bank A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit. It can also refer to a bank or a division of a larger bank that deals with whol ...

Silicon Valley Bank Silicon Valley Bank (SVB) is a commercial bank division of First Citizens BancShares. The bank was previously the primary subsidiary of SVB Financial Group, a Public company, publicly traded bank holding company that had offices in 15 U.S. state ...

, until the bank failed in March 2023 after a

bank run A bank run or run on the bank occurs when many Client (business), clients withdraw their money from a bank, because they believe Bank failure, the bank may fail in the near future. In other words, it is when, in a fractional-reserve banking sys ...

. The company was a member of the

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices and in ...

index until March 15, 2023. According to public filings, as of December 31, 2022, SVB Financial Group had 164 subsidiaries. Until March 2023, the companies subsidiaries included Silicon Valley Bank and SVB Private, a

private banking Private banking is a general description for banking, investment and other financial services provided by banks and financial institutions primarily serving high-net-worth individuals (HNWIs) – those with very high income or substantial asset ...

service affiliated with Silicon Valley Bank that, along with its affiliates SVB Investment Services and SVB Wealth, offered client services especially catered to

private equity Private equity (PE) is stock in a private company that does not offer stock to the general public; instead it is offered to specialized investment funds and limited partnerships that take an active role in the management and structuring of the co ...

and

high-net-worth individual In the financial services industry, a high-net-worth individual (HNWI) is a person who maintains liquid assets at or above a certain threshold. Typically the criterion is that the person's financial assets (excluding their primary residence) are ...

s. Both Silicon Valley Bank and SVB Private were placed in

receivership In law, receivership is a situation in which an institution or enterprise is held by a receiver – a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights" – especia ...

and sold to First Citizens Bank. SVB Securities was sold to its management in July 2023 and renamed Leerink Partners. SVB Capital was sold in May 2024 to a newly formed entity affiliated with Pinegrove Capital Partners.

History

SVB Financial was founded as Silicon Valley Bancshares on April 23, 1982, by Bill Biggerstaff and Robert Medearis over a poker game. Silicon Valley Bank was incorporated as a wholly-owned subsidiary in October 17, 1983. In 1988, the company went public via an

initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investm ...

, raising $6 million. The company's stock price soared through the

dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...

but fell 50% when the bubble burst. The company reincorporated as a

Delaware corporation The Delaware General Corporation Law (sometimes abbreviated DGCL), officially the General Corporation Law of the State of Delaware (Title 8, Chapter 1 of the Delaware Code), is the statute of the Delaware Code that governs corporate law in the U. ...

in 1999. Ken Wilcox became CEO in 2000. In 2001, the company's

investment banking Investment banking is an advisory-based financial service for institutional investors, corporations, governments, and similar clients. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by und ...

arm,

SVB Securities Leerink Partners LLC is an American independent investment bank providing healthcare companies and investors with financial services including M&A advisory, equity and debt capital markets, proprietary research, and sales and trading capabilitie ...

, expanded its business with a $100 million acquisition of Palo Alto Alliant Partners, which was rebranded SVB Alliant. In 2002, it formally entered the private banking business, building on prior experience and relationships with wealthy venture capitalists and entrepreneurs. On May 31, 2005, Silicon Valley Bankshares rebranded as SVB Financial Group, signaling the company's diversification away from commercial banking. SVB Alliant ceased operations in 2007. In December 2008, SVB Financial received a $235 million investment from the

U.S. Treasury The Department of the Treasury (USDT) is the Treasury, national treasury and finance department of the federal government of the United States. It is one of 15 current United States federal executive departments, U.S. government departments. ...

through the

Troubled Asset Relief Program The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by U.S. Presi ...

. The U.S. Treasury received $10 million in dividends from SVB Financial and, in December 2009, the company repurchased the outstanding stock and warrants held by the government, funding this through a stock sale of $300 million. In 2015, CEO Greg Becker indicated that SVB had yet to make immediate plans to re-enter the

sector as it had before 2006. In January 2019, SVB Financial acquired Leerink Partners LLC, and renamed the business SVB Leerink. In 2021, SVB acquired Boston Private Financial Holdings and merged its subsidiary Boston Private Bank & Trust Company into Silicon Valley Bank and SVB Private. In 2021, SVB acquired media and telecom research company MoffettNathanson LLC. In February 2022, SVB Leerink was rebranded as SVB Securities. In August 2024, SVB Financial Group received a U.S. judge's permission to turn over its assets to creditors and end its bankruptcy. As part of its bankruptcy restructuring, SVB Financial sold various assets, spinning off its venture capital business and investment banking unit.

Collapse of Silicon Valley Bank

In March 2023, Silicon Valley Bank experienced a

and collapsed. Then Federal Reserve Board Vice Chair for Supervision Michael Barr reported its customers tried to withdraw 81% of its deposits ($142 billion of a $175 billion total, as of the end of 2022) over two days. The failure of Silicon Valley Bank was the largest of any bank since the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

by assets, and the second-largest in U.S. history behind that of

Washington Mutual Washington Mutual, Inc. (often abbreviated to WaMu) was an American Bank holding company, savings bank holding company based in Seattle. It was the parent company of Washington Mutual Bank, which was the largest savings and loan association in ...

. On March 10, 2023, the California Department of Financial Protection and Innovation closed SVB, Santa Clara, and appointed the FDIC as receiver, which transferred all the bank's assets to a newly-established

bridge bank A bridge bank is an institution created by a national regulator or central bank to operate a failed bank until a buyer can be found. While national laws vary, the bridge bank is usually established by a publicly backed deposit insurance organis ...

. The holding company was not included in the bank closing or resulting receivership. It is no longer affiliated with either Silicon Valley Bank or SVB Private. When the FDIC took over Silicon Valley Bank on March 10, it seized the Santa Clara headquarters shared by the bank and SVB Financial Group; as a result, the holding company moved its headquarters to its offices in New York City. On March 13, 2023, SVB Financial Group began exploring a potential sale of the bank's sister companies SVB Capital and SVB Securities. The latter's founder, Jeffrey Leerink, expressed interest in buying back the firm. SVB Financial Group filed for

Chapter 11 bankruptcy protection Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, wh ...

on March 17, one week after the bank's failure. A group including

Centerbridge Partners Centerbridge Partners, L.P. is a multi-strategy private investment firm focused on leveraged buyouts and distressed securities. The firm manages over $56 billion of assets

Davidson Kempner Capital Management Davidson Kempner Capital Management LP (often known by the short form Davidson Kempner) is a global institutional alternative investment management firm with over $36 billion in assets under management. Davidson Kempner is headquartered in New Yor ...

, and

PIMCO Pacific Investment Management Company LLC (PIMCO) is an American investment management firm. While it has a specific focus on active fixed income management worldwide, it manages investments in many asset classes, including fixed income, share ca ...

reportedly bought a stake in the company in anticipation of the bankruptcy. On June 18, 2023, SVB Financial Group announced it had agreed to sell SVB Securities in a management buyout, led by Leerink, with funds from the

Baupost Group The Baupost Group is a hedge fund founded in 1982 by William Poorvu and partners Howard Stevenson, Jordan Baruch and Isaac Auerbach. Seth Klarman, who was asked by Poorvu to help run the fund, remains at its head today. Baupost Group's investm ...

. MoffettNathanson LLC was not included in the sale. In July 2023, the buyout was approved in bankruptcy court, and SVB Securities was renamed to Leerink Partners. On January 9, 2024, SVB Financial Group announced it planned to turn control of SVB Capital over to a new company controlled by its creditors. On 20 March, 2024, SVB Financial Group announced that it would sell its Indian subsidiary SVB Global Services India to First Citizens BancShares. On 3 May, 2024, SVB Financial Group entered into a definitive agreement to sell its investment platform business, SVB Capital, to a newly formed entity affiliated with Pinegrove Capital Partners and backed by

Brookfield Asset Management Brookfield Asset Management Ltd. is a Canadian-American alternative asset manager. The company was founded in December 2022 as a spin-off of the asset management operations of Brookfield Corporation. At its inception, the company was headquarter ...

and Sequoia Heritage.

References

External links

*
Bankruptcy website
{{Finance links historical , symbol = SIVB , google = SIVB:NASDAQ , yahoo = SIVB , sec_cik = 719739 1980s initial public offerings 1982 establishments in California American companies established in 1982 Companies based in Santa Clara, California Companies formerly listed on the Nasdaq Companies that filed for Chapter 11 bankruptcy in 2023 Companies traded over-the-counter in the United States Financial services companies established in 1982 Holding companies established in 1982 Holding companies of the United States