Bank of Silicon Valley new owner faces two challenges: improving business while restoring the bank’s reputation.
In a Financial Times interview published on Sunday (April 23), Peter Bristow – the chairman of North Carolina-based First Citizens – said he was working to control deposit outflows and stop bankers jumping ship to join rivals, while trying to restore confidence in a financial institution at the center of a global banking crisis.
“We are in the early days of their stabilization and recovery,” said Bristow, whose bank bought Silicon Valley (SVB) last month after federal regulators took it over.
While First Citizens retains the SVB name and runs it as a unit of its own bank, it has struggled to polish SVB’s tarnished brand.
“[SVB] was the number one bank in technology and life sciences for over 30 years and all of a sudden it disappeared so we spent a lot of time trying to give people the confidence that we are in the bank and plan to continue to run the model they were running,” Bristow said.
The report notes that some Silicon Valley startups and investors are skeptical of First Citizens, which has limited venture capital experience.
“A lot of what SVB did – events, mortgages, subprime loans – didn’t make economic sense unless you saw the full lifecycle of the relationship,” said the head of an operation of multi-billion dollar venture capital at the FT. “They were able to do this because they knew everyone in the ecosystem.”
Bristow suggested his bank might reconsider SVB’s lending to venture capitalists and the companies they backed.
“As much as [venture lending] was a fundamental tenet of what SVB did, the question was, did it create a mass in the repositories that you might not want? ” he said.
In a interview last week with Karen Webster from PYMNTS, Amias Geretypartner at QED investors, said venture debt would become a smaller industry with SVB under new ownership. And key players in the space will become more selective about which companies they lend to.
However, he pointed out that it’s not “whether you get capital from me, or a lender, or you get started” what makes a great business, but requires a great product, great growth and new ideas.
Meanwhile, PYMNTS also conducted interviews with a dozen finance chiefs following the SVB collapse, all of whom said the bank’s collapse underscored the need for best practices.
Among them was Carlos Sanchez-ArrutiCFO at payment solutions provider mangopaywho said the March banking crisis “validated the discipline that CFOs need to have when it comes to cash and cash management” and served as a “wake-up call” for many businesses and CFOs to return to the essential.
Sanchez-Arruti added that the new macro environment has made it vital for finance leaders to shift from a “sexier focus on just growth”, to one that emphasizes long-term visibility on working capital. and profitability.