Reopened SVB Entices Depositors with FDIC Protections

Silicon Valley Bank is eager for deposits—and may be one of the safest places to leave money, the bank’s new CEO told customers and venture capitalists this week.

Silicon Valley Bank (SVB) reopened for business Monday, and its new chief executive, former Fannie Mae CEO Tim Mayopoulos, is imploring the bank's customers to return to the bridge bank the FDIC created to protect depositors of the failed bank.

In a statement released Tuesday, Mayopoulos implored customers to return their assets to the bank, dangling the promise of federal backing to sweeten the deal.

“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days.” he said. “This action by FDIC effectively means that deposits held with SVB are among the safest of any bank or institution in the country.”

And while senior management is out at Silicon Valley Bank, the bank’s employees will keep their jobs, according to a tweet from a company executive.

Bill Ackman, CEO of Pershing Square agreed, noting that the “irony” of the FDIC action was to create a three-tiered banking system in the U.S. where the bridge banks for SVB and Signature Bank “are now the safest banks with explicit guarantees on all deposits.”

Venture Capitalists Vow Support for Renewed SVB

Venture capitalist Sheel Mohnot of Better Tomorrow Ventures said on Twitter Mayopoulos has done a “good job so far” in trying to reassure customers, including hosting a Zoom meeting.

“He wants to assure people that SVB is not in wind-down mode- it’s open for business,” he said.

Mayopoulos can look forward to the support from some in the venture capital industry, where Silicon Valley Bank had built much of its business.

After regulators closed the bank on March 10, more than 650 venture capital firms have signed a letter pledging to support the bank should it be purchased or recapitalized.

One of those venture capitalists, Mark Suster of UpfrontVC, said the bank’s representatives will be reaching out to clients to convince them to keep their deposits with the bank. In a Twitter post, he said the bank’s FDIC protections “help a lot” and SVB should be “an important option” for Silicon Valley businesses.

“If the bank is to continue to be operational it obviously needs deposits. Given 100% FDIC insurance the goal is to convince tech to keep some money there,” he said.