A motorist passes the entrance of the Silicon Valley Bank in Santa Clara, California on Saturday. Silicon Valley Bank parent SVB Financial filed for Chapter 11 bankruptcy on Friday. Photo by Terry Schmitt/UPI | License Photo
March 17 (UPI) -- SVB Financial Group, the former parent of the collapsed Silicon Valley Bank before that institution's closure last week, filed for Chapter 11 bankruptcy in New York on Friday.
SVB Financial Group said in a statement while it is the holding company for SVB Capital and SVB Securities, both of those businesses are not part of the bankruptcy. The statement also said SVB Financial is no longer affiliated with Silicon Valley Bank or the bank's private banking and wealth management business, SVB Private.
Silicon Valley Bank is now running as Silicon Valley Bridge Bank under the jurisdiction of the Federal Deposit Insurance Corporation.
SVB Financial Group said has about $2.2 billion of liquidity in addition to cash and its interests in SVB Capital and SVB Securities as well as "other valuable investment securities accounts and other assets for which it is also exploring strategic alternatives.
However, the company said it has funded debt of about $3.3 billion in aggregate principal amounts of unsecured notes along with $3.7 billion of preferred equity outstanding.
"The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities," William Kosturos, chief restructuring officer for SVB Financial Group, said in a statement.
"SVB Financial Group will continue to work cooperatively with Silicon Valley Bridge Bank. We are committed to finding practical solutions to maximize the recoverable value for stakeholders of both entities."
SVB Financial Group said it will use the bankruptcy process to evaluate strategic alternatives and investments.
"As previously announced, this process is being led by a five-member restructuring committee appointed by the SVB Financial Group board of directors," the group said in its statement. "Centerview Partners LLC is assisting the restructuring committee with the strategic alternatives process, which is already underway and has attracted significant interest."
California regulators shut down Silicon Valley Bank on March 10, making it the first FDIC-insured bank to fail in more than two years. Days later, regulators closed Signature Bank, another tech-focused lender, sending fears of a widespread banking panic.
Federal Reserve Chair Jerome Powell said on Monday that the reserve board has launched a review of its oversight of Silicon Valley, which established a reputation as the "go-to" bank for tech start-ups.
He said the board's Vice Chair for Supervision Michael Barr will lead the review.
Late Friday, The Hill reported the U.S. House Financial Services Committee has scheduled a hearing later this month to focus on the failures of Silicon Valley Bank and Signature Bank. Scheduled to appear are Martin Gruenberg, the chairman of the FDIC's board of directors, and Michael Barr, the vice chair for supervision of the Federal Reserve's Board of Governors.