London — The The collapse of Silicon Valley Bank It was the result of a banking crisis, not technology, according to top venture capitalists.
Anne Glover, CEO and co-founder of Amadeus Capital, said Friday that SVB’s crisis stems from the “totally irresponsible” practice by Silicon Valley banks and their management, namely taking short-term deposits from VCs and putting them into long-term maturities. Said it was caused by investing. debt.
At a tech investor showcase in East London, Glover said, “This is a one-on-one failure of the bank and, incredibly frankly, irresponsible behavior by senior management at SVB in California. It is.” A spokesperson for SVB declined to comment when contacted by CNBC.
SVB was closed and taken over by the US government. Since then, many start-ups and venture capitalists have withdrawn large amounts of money amid concerns about their financial health.
The company had previously attempted to raise $2.25 billion to fill a $1.8 billion hole in its balance sheet caused by a $21 billion loss in bonds sold. The bank was a key pillar of the tech industry, providing loans to companies often turned down by traditional banks.
“They took cash deposits from VCs and hedge funds and put them into first-year mortgage bonds that depreciate in value when interest rates rise,” Glover added.
“They didn’t hedge interest rates. This is really basic banking and has nothing to do with the tech community. The tech community was affected.”
across the Atlantic, SVB UK division sold to a British bank HSBC £1 protected £6.7bn ($8.3bn) of deposits in a deal facilitated by the government and the Bank of England.
Glover, a non-executive director on the Board of the Bank of England, said the central bank had “done a phenomenal job of putting forward a satisfactory resolution for the UK, much better than the US”.
Rising interest rates have put a wider strain on banks, resulting in higher debt. On the other hand, while banks are more profitable to lend, they also hold government bonds on their balance sheets. As interest rates rise, the value of those assets declines.
Credit Suisse is the sector’s most notable failure to date. Swiss banking giants Bailed out by rival lender UBS In a price reduction deal coordinated by the Swiss government.
Glover is a prolific technology investor who joined Amadeus after working on the investment team at Apax Partners & Company Ventures. In 1997 she co-founded Amadeus with Hermann Hauser, who helped develop the first Arm processor.
