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

Publisher IDC
Published May 03, 2023
Length 5 Pages
SKU # IDC17915991

Description

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


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

Please Note: Extended description available upon request.

Table of Contents

5 Pages
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 Failure — A Comparison of the United States and the United Kingdom
The U.S.
The U.K.
Differences Between Jurisdictions
Advice for the Technology Buyer
Human Element and Judgment
Balance Sheet Management
Deposit Data Considerations
Learn More
Related Research
Synopsis

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