The Demise of Silicon Valley Bank
March 10, 2023 | Marc Rubinstein | Net Interest
“When you’re not working, what do you do to de-stress?”
That was the last question Greg Becker, CEO of Silicon Valley Bank, fielded at an investor conference on Tuesday this week.
“Cycling is my advice,” he replied. “Living in Northern California and being on the peninsula. That’s just—I think it’s the best bike-riding cycling in the world, period.”
Three days later, Becker’s bank is in receivership.
We’ve talked before about the interest rate risk that lurks on banks’ balance sheets and how the industry manages it. During the pandemic, banks took in record volumes of new deposits. Between the end of 2019 and the first quarter of 2022, deposits at US banks rose by $5.40 trillion. With loan demand weak, only around 15% of that volume was channelled towards loans; the rest was invested in securities portfolios or kept as cash. Securities portfolios ballooned to $6.26 trillion, up from $3.98 trillion at the end of 2019, and cash balances went up to $3.38 trillion from $1.67 trillion.
