Founders swarmed SVB’s Bay Area branches looking for answers after bank’s historic failure
A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California.
Justin Sullivan | Getty Images
Tech founders and execs were undeterred by the inclement weather on Friday, as they crowded the doors of Silicon Valley Bank locations across the Bay Area, in hopes of getting their money and answers to their critical questions.
Regulators shuttered SVB and seized its deposits in the second-largest U.S. banking failure in history and the largest since the 2008 financial crisis.
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Thousands of startups have long counted on SVB for everyday banking services, and the firm’s sudden collapse raised imminent concerns about how clients would pay their bills and their employees.
Some company leaders went to the bank’s branches to try and get help. While waiting outside in long lines, they found camaraderie with those in the same boat and shared stories of their misfortunes.
‘Hoping for better news Monday’
SVB had 17 branches in California and Massachusetts, and the FDIC said in its press release that “the main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023.”
The regulator said that all uninsured deposits will be accessible Monday. But the FDIC only insures deposits of up to $250,000 per client and, as a bank primarily serving businesses, roughly 95% of SVB’s deposits are uninsured.
In Santa Clara on Friday morning, SVB customers arrived frustrated and angry, many donning blank and tired faces.
A group of four men gathered near the doors. Some had tears in their eyes.
One of the men, who asked not to be named, told CNBC he’d been banking with SVB since 2018 and never expected to see this happen. He said most of his money was tied up in the bank. Eventually, the man let out a soft sob, apologizing as he excused himself.
A woman, dropped off by an Uber, slung her backpack over her shoulder and marched to the front doors of the bank, past the crowd, determined to speak with someone. When she reached the locked doors, people in the crowd mumbled about how nobody would talk to them. Unsuccessful, the woman ordered another Uber that picked her up a few minutes later.
Toward the end of the day, startup founders trickled in less and less to the Menlo Park office promenade in hopes of catching a representative.
Jennifer Elias
Customers could be heard repeating the phrase, “hoping for better news Monday.”
A sign posted on the windows of each location repeated the line from the press release about all locations opening up on Monday.
One startup employee, who didn’t want to be identified, brought up the 2008 financial crisis and the FDIC’s takeover of Washington Mutual. The failed savings and loan was sold to JPMorgan Chase, and the man said he’s hoping for a similar type of result for SVB.
At one point a pizza delivery person showed up with at least five boxes of pizzas. It was the first time the doors opened in hours.
‘I’m trying to get a check!’
In Menlo Park, Teslas filed into SVB’s Sand Hill Road parking lot Friday. Customers exited their cars and approached the entrance.
Those who visited a San Francisco branch earlier in the day were met with a Post-it note directing corporate customers to the bank’s Sand Hill location. It’s a 40 mile drive, and one that didn’t bring satisfying answers.
“I’m trying to get a check!” one man said, knocking on the locked glass doors while making eye contact with someone working in the office. A representative came out periodically to answer clients’ questions in whispering tones, declining to address the press.
SVB clients knocked on the locked entrance doors of the Menlo Park office in hopes of getting the attention of a security guard or representative.
Jennifer Elias
One startup founder told CNBC he came to make sure an international wire transfer of tens of thousands of dollars cleared.
“I just don’t know if they’re going to cancel the wire transfer and they hadn’t said anything about it and we couldn’t get through when we called,” said the man, who asked not to be identified. “So, we’re just kind of scrambling and I figured I’d just come by here since I’m not too far.”
He said that when the check clears, “I’ll probably look into other institutions to put money.” He said he wasn’t too worried because he had insurance on the transaction.
Two startup founders waited for a representative to respond to their knocking.
“After this, we’re putting our money in multiple banks,” one said to the other. “Us too — if we’re still around,” the other said.
The men declined to provide their names, only telling CNBC that they were founders of separate small startups.
Another startup exec told a representative that he made a transaction at 8:30 a.m. The bank employee said he’d missed the 8:15 cutoff time to have a transaction processed. Looking defeated, the man bowed his head, saying “You can understand the stress I’m in — this is our only bank.”
“I understand,” the representative said, “There’s a sense of urgency from all of us and each day we’ll know more so, there’s that comfort.”
Spotting the representative, another client approached her and said, “We tried to call the number but couldn’t get through,” referring to a customer service line posted in the company’s press release. The bank employee apologized and promptly closed the door.
Some people were showing up just for photos and selfies. At the Menlo Park branch, one person, wearing a Patagonia jacket, posed for a picture in front of the SVB logo. When asked if he was a customer, he laughed and said, “I used to be.”
— CNBC’s Rebecca Smith contributed to this report.
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