'Utterly irresponsible': SVB failure was caused by a banking — not tech — crisis, top VC says
LONDON — The collapse of Silicon Valley Bank was the result of a crisis in banking rather than technology, according to a top venture capitalist.
Anne Glover, CEO and co-founder of Amadeus Capital, said Friday that the SVB crisis was caused by «utterly irresponsible» practices by Silicon Valley Bank and its management — namely, taking short-term deposits from VCs and investing them in long-maturity debt.
«It is a banking one-on-one failure, unbelievably irresponsible frankly by the senior management of SVB in California,» said Glover, speaking at a tech investor showcase in east London. A spokesperson for SVB wasn't immediately available for comment when contacted by CNBC.
SVB was shut down and taken over by the U.S. government after a slew of startups and venture capitalists withdrew their money en masse amid fears over its financial health.
The firm had earlier tried to raise $2.25 billion of capital to plug a $1.8 billion hole in its balance sheet caused by the sale of $21 billion worth of bonds at a loss. The bank was a crucial pillar of the tech industry, offering financing for firms often turned away by the traditional banks.
«They took cash deposits from VCs and hedge funds and put them into first-year mortgage bonds that fell in value when the interest rates went up,» Glover added.
«They didn't hedge the interest rate. This is really basic banking, it's nothing to do with the tech community. The tech community was impacted.»
Across the Atlantic, SVB's U.K. arm was sold to British bank HSBC for £1, in a government and Bank of England-facilitated deal that protected £6.7 billion ($8.3 billion) in deposits.
Glover, who serves on the Bank of England's board as a non-executive director, said the central bank «did a
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