As U.S. regulators look for a buyer for the remnants of SVB Financial Group, they will seek to find a home for its growing commercial banking operations, wealth unit, investment bank and fund manager.
Silicon Valley Bank was seized by regulators amid a run on deposits and an aborted push to raise capital. The Federal Deposit Insurance Corp. now aims to find a buyer for the company’s various businesses to return as much of the client’s money as possible.
Major banks may at least explore buying SVB’s business because of its manageable size and client base of tech companies and wealthy founders. The bank was undone by piling up bonds ahead of rising rates and a concentrated depositor base, but it had been turning a profit every year before collapsing rapidly.
However, the FDIC’s statement on Friday did not indicate the possibility of a quick sale of all the companies. The regulator said it would issue an initial dividend to uninsured depositors next week with payments to come when assets are sold.
The bank had assets of about $212 billion at the end of the year, a number that has been shrinking since the company sold its holdings to raise cash and depositors withdrew their funds. More than half of the bank’s assets are in its bond portfolio, a setup that has led to losses when rates rise but should be easy to unload.
The company had more than 8,500 employees as of Dec. 31, according to its annual filing. With dozens of offices around the world, the company operates in the US and Canada, as well as in the UK, Europe, Asia and the Middle East. The Bank of England said on Friday it plans to declare the UK unit bankrupt in a separate process.
Here’s a look at SVB’s operating segments:
Silicon Valley Bank
Commercial bank SVB is well known in California as a banker for private equity and venture capital firms, specializing in technology and healthcare clients. It reports a profit of $3.4 billion for 2022, while deposits are around $172 billion. Revenue of $5.23 billion is about 84% of the company’s total in 2022.
Most of the company’s loans are for private equity and venture capital funds, and they specialize in capital credit lines. The line gives VC firms the ability to tap cash to directly invest in startups, and then pay them back after receiving money that pension funds and other investors have committed to putting into the fund.
SVB Securities
The investment bank provides services to companies in industries including software, digital infrastructure, fintech, medical devices and biopharma. It advised about $9 billion in M&A transactions last year, ranking 83rd globally, Bloomberg’s league table shows. The unit is expected to make $95 million in 2022 on revenue of $508 million.
SVB Capital
The fund manager focused mainly on venture capital investments and managed $9.5 billion at the end of December. The fund generates investment returns and management fees for SVB.
The unit suffered from a more difficult environment to invest in technology last year, posting a pretax loss of $180 million, compared to profits in 2021 and 2020.
SVB Private
SVB’s smallest unit by revenue, including high-net-worth clients acquired in the 2021 acquisition of Boston Private Financial Holdings. The business has $17 billion in client assets, which would be a small addition to a giant that manages trillions.
Private banks and wealth managers offer conventional products such as mortgages, lines of credit, and tax and trust services. Also unconventional, such as vineyard development loans.
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