Three days into his position as Silicon Valley BankGovernment-appointed CEO Tim Mayopoulos has a message for venture capital and powerful startup clients.: Bring the money back.
That was consistent throughout Mayopoulos’ response as he fielded more than 400 questions from concerned clients in 30 minutes. Zoom call Wednesday.
“There is no safer place in the U.S. banking system to put your deposits,” Mayopoulos said on the call, which CNBC attended and first reported. He urged clients to return funds to their banks and to alert their relationship team immediately of any problems with incoming or outgoing wire transfers, which was a problem for many company executives who were unable to withdraw deposits from banks last week.
Mayopoulos is joined by SVB chief operating officer Phil Cox, the only remaining executive from the core C-suite team. SVB’s former CEO and CFO no longer work for the bank, Mayopoulos said in the call.
While Mayopoulos is making demands on current and former clients, it is unclear how long he will remain in his current job as the bank is now controlled by the Federal Deposit Insurance Corporation. Mayopoulos said he did not know what SVB’s “exact end state” would look like, and he listed three possibilities: recapitalization, sale, or liquidation.
A recapitalization will allow SVB to continue to exist as an independent entity. But that possibility depends on financial institutions or other groups of investors stepping up.
“I know I’m new to the scene,” Mayopoulos said in direct response to concerns from venture capital firms. “You have been patient with us because we have gone through some operational difficulties. All I ask is that you give us a chance to win back your trust and confidence.”
Mayopoulos’ distance is matched by venture investors who have taken to social media to express their shock and dismay at the collapse of the Silicon Valley institution. In the call, Mayopoulos repeatedly referred to the “innovation economy,” and the startup ecosystem in which “Silicon Valley has become an important part.”
Customer feedback will be critical in determining the bank’s future, Mayopoulos said on the call. Input “from clients and from venture capital and the entrepreneurial community” will shape the schedule for the ultimate emergence of SVB from government control.
“One of the things I want to tell you is that you have several agencies in this matter that you have to choose, at least send a clear signal about what you want the result of this process,” said the CEO in him. prepared speech. “If our clients choose to take their deposits and keep them in other institutions, that clearly limits some of the options we have in terms of ultimate results.”
SVB’s longstanding relationship with Silicon Valley’s most elite venture firms is mutually beneficial and symbiotic.
From standing at the poker table to the almost fatal bank opening last week, SVB focused on taking risks in markets where most traditional banks shunned. SVB found a niche in venture loans, financing companies that need cash infusions, especially between financing rounds.
In exchange for future considerations, often ventures or guarantees in companies, SVB becomes a big player in the venture debt space, extending from software and the internet to life sciences and robotics.
In more than 40 businesses, SVB grows together with depositors, building a profitable mortgage business and personal banking products that allow it to retain and attract the founders whose fortune the bank helps.
From legacy companies like Cisco to more modern technology companies like DocuSign and Roku, SVB has focused on providing financing and banking services at every stage of growth.
“There are other places that make venture loans, but Silicon Valley Bank is the 1,000-pound gorilla in the room,” said Ami Kassar, CEO of business credit consultancy Multifunding.
The exclusivity contract, meaning an unfulfilled promise that the company will keep all of its money in SVB, is an important aspect of the financing deal. When SVB failed, it roiled the startup that had traded banking flexibility for liquidity. Some fled the bank, breaking their covenants to keep the lights on and paychecks.
When asked about potential exclusivity violations, Mayopoulos indicated that he was aware of the emergency actions taken by the startups.
“Due to the change in circumstances and what the FDIC has done in terms of insurance coverage, we want to work with our clients to get those deposits back to us,” the CEO said in the call.
Returning clients shouldn’t worry about the fallout from breaching covenants, Mayopoulos advises. They didn’t say what would happen to former customers who did the same thing.
– CNBC’s Cat Clifford contributed to this report.