SVB Financial Group Files For Chapter 11 Bankruptcy

The following report is by CoinTelegraph:

Troubled SVB Financial Group has filed a voluntary petition for a court-supervised reorganization under Chapter 11 in the United States Bankruptcy Court to preserve value.

Announcing the news on March 17, SVB said that the funds of its venture capital arm, SVB Capital, and the broker-dealer SVB Securities, as well as funds of general partner entities, are not included in the bankruptcy proceedings. The entities will continue to operate in an ordinary manner, while SVB Financial Group proceeds to explore strategic alternatives for its businesses.

SVB Financial Group also emphasized that the company is no longer affiliated with Silicon Valley Bank N.A. or the bank’s private banking and wealth management business, SVB Private. The bank’s successor, Silicon Valley Bridge Bank, N.A., is operating under the jurisdiction of the Federal Deposit Insurance Corporation (FDIC) and is not included in the Chapter 11 filing.

According to SVB Group’s estimations, the firm has $2.2 billion of liquidity. In addition to cash and its interests in SVB Capital and SVB Securities, the firm has “other valuable investment securities accounts and other assets,” for which it is also exploring strategic options.

SVB Group’s funded debt is about $3.3 billion in aggregate principal amount of unsecured notes, which are “only recourse to SVB Financial Group” and have no impact on SVB Capital or SVB Securities, the announcement notes. SVB Group also has $3.7 billion of preferred stock.

SVB Group aims to deploy the court-supervised process to evaluate strategic alternatives for SVB Capital, SVB Securities and its other assets, SVB Group chief restructuring officer William Kosturos said, adding:

The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities.

Kosturos stressed that SVB Capital and SVB Securities will continue to operate and serve clients, led by their independent teams.

The ongoing SVB crisis has triggered a lot of uncertainty not only in the traditional banking system but also in some cryptocurrency markets. Circle, the operator of the major stablecoin USD Coin had $3.3 billion, or roughly 8% of its reserves, tied to SVB after the bank shut down operations on March 8. Due to the events, USDC briefly depegged, tumbling to $0.87 and subsequently repegging amid reports of SVB resolution.

On March 13, banking giant HSBC officially announced that its subsidiary, HSBC UK Bank, acquired Silicon Valley Bank UK for 1 British pound ($1.2). According to HSBC Group CEO Noel Quinn, the acquisition made “excellent strategic sense” for HSBC’s business in the United Kingdom, strengthening its commercial banking franchise.

AUTHOR COMMENTARY

SVB’s bankruptcy, bailout, and buyout are just the start of more. As I have been saying, the banks are insolvent and they are on borrowed time. They are holding onto toxic assets and securities that are now volatile because of the increased interest rates, no deposits, no savings, and no loans.

Again, as I continue to emphasize here: this is a consolidation of power. The big fish are eating up the littler fish; but what you are not supposed to know is that the big fish have the same problems too…

SEE: Was The Silicon Valley Bank And American Banking Turmoil Designed To Foster In Central Bank Digital Currencies?

The rich ruleth over the poor, and the borrower is servant to the lender.
Proverbs 22:7

[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).

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