Tim Mayopoulos attends the Bilt Rewards Launch Party at Equinox Hotel New York at Hudson Yards on June 22, 2021 in New York City.
Sean Zanni | Patrick McMullan | Getty Images
Three days into his tenure as government-appointed CEO of Silicon Valley Bank, Tim Mayopoulos has a message for his high-powered venture capital and startup clients: Bring your money back.
This was consistent across all of Mayopoulos’ responses as he answered more than 400 questions from affected customers during a 30-minute Zoom call on Wednesday.
“There is no safer place in the American banking system to put your deposits,” Mayopoulos said on the call, which CNBC attended and was the first to report. He urged customers to return their funds to the bank and promptly alert their relationship teams of any problems with incoming or outgoing wire transfers, a concern for many business executives who have been unable to withdraw their bank deposits last week.
Mayopoulos was joined by SVB chief operating officer Phil Cox, the only remaining executive from the core C-suite team. SVB’s former CEO and CFO are no longer employed by the bank, Mayopoulos said. during the call.
While Mayopoulos appeals to his current and former clients, it is unclear how long he will remain in his current job as the bank is currently controlled by the Federal Deposit Insurance Corporation. Mayopoulos said he didn’t know what the “exact end state” of SVB would look like, and he listed three possibilities: recapitalization, sale or liquidation.
A recapitalization would allow SVB to continue to exist as a stand-alone entity. But this possibility depends on the intervention of another financial institution or a group of investors.
“I recognize that I am new to the scene,” Mayopoulos said in direct response to concerns from venture capitalists. “You have been patient with us as we have worked through some of these operational difficulties. All I would ask is to give us a chance to regain your trust.”
Mayopoulos’ speech was tailored to venture capitalists who took to social media en masse to express their shock and dismay at the collapse of a legendary Silicon Valley institution. During the call, Mayopoulos repeatedly referred to the “innovation economy” and a startup ecosystem in which “Silicon Valley has played a significant role.”
Customer feedback will be key in determining the bank’s future, Mayopoulos said on the call. Contributions “from customers and venture capital and the entrepreneurial community” would determine the timing of SVB’s eventual emergence from government control.
“One of the things I want to tell you is that you have some agency in this area that you can actually vote on, at least to send clear signals about what you want the outcome of this process to be” , the CEO said in his prepared remarks. “If our clients choose to take their deposits and hold them in other institutions, that clearly limits the range of options we have in terms of the end result.”
SVB’s longstanding relationship with Silicon Valley’s most prestigious venture capital firms is mutually beneficial and symbiotic.
From its founding at a poker table until the near-fatal bank run last week, SVB has focused on taking risk in a market that most traditional banks avoided. SVB has found a niche in subprime debt, funding companies that needed cash injections, particularly between funding rounds.
In exchange for future consideration, often shares or warrants in a company, SVB has become a massive player in the venture debt space, spanning from software and the internet to life sciences and to robotics.
In its more than 40 years in business, SVB has grown with its depositors, creating a lucrative mortgage business and a range of private banking products that have enabled it to retain and charm the founders whose fortunes the bank helped create. .
From legacy companies like Cisco to more modern technology companies like DocuSign and Roku, SVB has been focused on providing financial and banking services at every stage of growth.
“There are other places that do risky debt, but Silicon Valley Bank was the £1,000 gorilla in the room,” said Ami Kassar, CEO of business lending consultant Multifunding.
Exclusivity contracts, meaning the absolute promise that a company would keep all of its money with SVB, were a key part of these financing agreements. When SVB failed, it rocked startups that had traded banking flexibility for cash. Some have fled the bank, violating their pledges to keep their lights on and their paychecks.
Asked about potential exclusivity breaches, Mayopoulos said he understands the emergency measures taken by startups.
“Given the changing circumstances and what the FDIC has done in terms of insurance coverage, we would very much like to work with our customers to get those deposits back to us,” the CEO said on the call.
Returning customers wouldn’t have to worry about the fallout of breaching their commitments, Mayopoulos suggested. He didn’t say what would happen to past customers who did the same.
– CNBC’s Cat Clifford contributed to this report.