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The Collapse of Silicon Valley Bank: Why Prudent Risk Management Matters

The Collapse of Silicon Valley Bank: Why Prudent Risk Management Matters

  • Publish Date:May 2023

  • Number of Pages:5

  • Report ID:6455429

  • Format:PDF

  • Publisher:IDC

$ 4500

Summary

This IDC Perspective examines the failure of Silicon Valley Bank in the U.S. and its U.K. subsidiary, including the macroeconomic and regulatory causes. The rise in U.S. interest rates had a severe impact on the composition of the bank's assets. As rates increased, clients in the technology industry started to get into financial trouble and needed cash to limit liabilities. Many began to withdraw funds from their accounts. SVB thus had to sell a substantial amount of its bond portfolio, exposing it to price decline and leading to losses. Trading of bank shares was halted and the bank was taken over by regulators and subsequently sold."Without adhering to a proper balance sheet and liquidity management methodology, a relatively minor shift in market risk can wipe out an entire bank and put it into recovery." -- Research Director George Briford, IDC Financial Services Insights

Table of contents

Executive Snapshot

Situation Overview

Introduction

Silicon Valley Bank -- An Overview

The Business Model

Driving Factors Behind the Failure

Macroeconomics: Rising Interest Rates

Regulatory: Off the Radar

Steps Leading to...

Methodology

Our market research methodology is designed to provide the clients with comprehensive and accurate information on various industries and markets. It includes data collection, primary interviews, macro-economic factor analysis, country-level data analysis etc.