SVB Parent Wants Access to Bank’s Records

The parent company of Silicon Valley Bank says it’s been locked out of the lender’s books.

SVB Financial, which declared bankruptcy soon after its bank was placed under federal control, said in a Sunday (March 19) court filing that it is seeking access to “books, records, files, electronic systems and key employees.”

Silicon Valley Bank (SVB) was taken over by the Federal Deposit Insurance Corp. (FDIC) on March 10 following a run on deposits, marking one of the largest banking failures in U.S. history.

The FDIC established a “bridge bank” to take over the banks business until it determines its fate, which could include a sale or a break-up of the bank.

On March 17, SVB Financial filed for bankruptcy, with Chief Restructuring Officer William Kosturos saying the process would help the company “preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities.”

However, the bankruptcy process has been “challenging” thus far, Kosturos said in the filing, due to a lack of cooperation from the bridge bank.

“That cooperation stopped in the days immediately prior to the filing, and Bridge Bank employees have since not provided any of the Debtor’s information to the Debtor’s officers or representatives and have cut off access to books and records,” he wrote.

The FDIC is still in the process of finding a buyer for SVB, and has reportedly said it would like to see that new owner be another bank rather than a venture capital (VC) firm or private equity group. As PYMNTS noted Sunday, North Carolina’s First Citizens Bank is among those that have expressed interest in buying SVB.

On Sunday, the FDIC announced the sale of another failed bank. Signature Bank, which collapsed in the days after SVB folded, has been purchased by Flagstar Bank, a subsidiary of New York Community Bancorp.

PYMNTS took a deeper dive into the collapse of SVB and its aftermath in a recent conversation with Amias Gerety, partner at FinTech VC firm QED Investors.

Though he argued the American financial system is stable, he said the country needs to grapple with what it does after realizing that the $250,000 deposit “cap” on insured funds no longer works for business in the U.S.

“That’s a real policy challenge,” Gerety told PYMNTS’ Karen Webster.

A potential solution is to charge for deposit insurance, possibly on a risk-adjusted framework — that function is already in place at the FDIC. Gerety noted that this could be a simple and effective (but perhaps imperfect) change in policy.

At the same time, he said there’s also a need to reassess the regulations governing regional banks and whether Trump-era laws that made it harder to regulate banks of SVB’s sizes need to be changed. Gerety also told PYMNTS he believes it’s time to take a closer look at the deposit base at smaller and mid-sized banks.