Apr 10, 2023 - Economy & Business

Ex-SVB bankers on the last days, their departures and what comes next

Illustration of piggy bank with shadow of bomb looming over it

Illustration: Sarah Grillo/Axios

Last month we reported that Stifel poached three top venture bankers from Silicon Valley Bank, while the FDIC was still seeking a buyer.

Fast forward: Last week Axios spoke with two of them, Jake Moseley and Matt Trotter, about the last days of SVB, the decision to leave, and how they believe the venture debt market has been forever changed. Some excerpts from our conversation follow:

Before the fall, per Moseley: "We were aware of the held-to-maturity investments ... We listened to the earnings calls and had discussions across our team and more broadly at SVB about that portfolio. But [management] also had justifications about the capital ratios, and we had visibility into analyst reports that were almost all buy or hold ratings. Did we foresee what was coming? No, we were blindsided."

Bank run, per Moseley: "That Thursday was probably the toughest day in my career, and 22 years at SVB ... We kept having conversations with concerned clients, but the best way to describe it is engaging in hand-to-hand combat when an avalanche or tsunami is coming at you."

  • Trotter: "Our job had been to build relationships, so people kept calling and texting us. The best we could do was present them with the wide range of outcomes... You had investors and CEOs with fiduciary responsibilities to take care of their companies and employees. I don't hold them accountable for [withdrawals] or blame them."

Departures, per Trotter: "We had a lot of loyalty and love for SVB ... But we quickly came to the realization that no matter what happened — if SVB continued as a standalone or was bought or wound down — the SVB we'd known was going to be very different on the backside, and we needed to decide where we wanted to spend the next 10 years of our careers."

Future, per Trotter: "The industry standard was that when you got a loan you had to have primary accounts and cash or investments with the lender, whether it be SVB or another lender. Not minimum balance requirements, but as an element of risk management, because you were able to monitor liquidity in a more dynamic way than through monthly financials. Also, though, it brought down lending costs for lots of early-stage companies, because the lender could make money off of credit cards or other things... I think the deposit rules and costs are going to change."

  • Moseley: There's going to be a need to diversify banking that wasn't felt before, which will lead to market share being split out across the industry. We see that as being forever changed. Just like the days of keeping 100% of your cash on balance sheet with one bank is forever gone."
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