LONDON — The The fall of Silicon Valley Bank It’s more a result of the banking crisis than technology, according to a leading venture capitalist.
Anne Glover, CEO and co-founder of Amadeus Capital, said on Friday that the SVB crisis was caused by the “completely irresponsible” practices of Silicon Valley Bank and its management – namely, taking short-term deposits from VCs and investing them in long-term debt.
“It was a failure of the bank, unbelievably irresponsibly by SVB senior management in California,” said Glover, speaking at a technology investor showcase in east London. . A spokesperson for SVB was not immediately available for comment when contacted by CNBC.
SVB was shut down and taken over by the US government after a series of startups and venture capital withdrew their funds amid concerns about SVB’s financial health.
The company had previously tried to raise $2.25 billion in capital to fix a $1.8 billion loss on its balance sheet from selling $21 billion worth of bonds at a loss. Banking is a key pillar of the tech industry, providing financing to companies that is often denied by traditional banks.
Glover added: “They took deposits from hedge funds and hedge funds and put them in first-year mortgage bonds that would depreciate in value as interest rates went up.
“They didn’t hedge. This is really basic banking, nothing to do with the tech community. The tech community has been impacted.”
Crossing the Atlantic Ocean, SVB’s UK branch has been sold to the Bank of England HSBC for £1, in a deal facilitated by the government and the Bank of England to protect £6.7 billion ($8.3 billion) in deposits.
Glover, who serves on the Bank of England’s board as a non-executive director, said the central bank “has done a phenomenal job in delivering a solution that pleases the UK”. Britain, much better than the United States.”
More broadly, banks have come under enormous pressure from rising interest rates, making debt more expensive. Although on the one hand it is more profitable to lend to banks, they are also holding government bonds on their balance sheets. As interest rates rise, those assets become less valuable.
Credit Suisse is the most notable failure in this area to date. The Swiss banking giant has rescued by rival lender UBS in a rebate arrangement coordinated by the Swiss government.
Glover, a major tech investor, joined Amadeus after running Apax Ventures previously. She co-founded Amadeus in 1997 with Hermann Hauser, who was credited with developing the first Arm processor.
