Feds step in for SVB, but fate in Tempe uncertain
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The fate of Silicon Valley Bank's Tempe location, along with those who work there, is up in the air after the feds moved to rescue the collapsing financial institution.
Driving the news: The U.S. Treasury Department, Federal Reserve and Federal Deposit Insurance Corp, announced Sunday that the FDIC would guarantee the deposits of customers who had more than $250,000 with SVB — the majority of its depositors.
- The move was aimed at halting a run on the bank, whose clientele is largely made up of people and companies in the tech sector.
Why it matters: SVB employs hundreds at its Tempe office, which opened along Tempe Town Lake in 2019.
- Nationally, regulators worried SVB's collapse would trigger similar crises, reminiscent of those in 2008, at other banks.
- Many tech startups that had money with SVB faced the prospect of being unable to meet payroll.
What they're saying: Paul Hickman, president and CEO of the Arizona Bankers Association (AzBA), tells Axios Phoenix he doesn't expect any "significant fallout" in the state's banking sector.
- "What the Treasury and the Fed announced yesterday seems like it will make all the trains run on time. To the extent there's any payroll repercussions here, that will get paid, and it will get paid within hours, not within days or weeks," he says.
Zoom out: Regional banks saw their stocks plummet Monday in the wake of the SVB failure, and Phoenix-based Western Alliance Bank experienced one of the steepest declines. Shares plunged 80% in early trading and closed 47% down.
- The bank told The New York Times withdrawals have been "moderate" from the $61.5 billion in deposits it held as of last Thursday and its cash reserves "exceed $25 billion and are growing."
- Western Alliance released an updated financial statement on Friday in hopes of calming investors and customers. It showed liquidity and deposits "remain strong."
Between the lines: Hickman said the view of his colleagues at other state bankers associations was that those regional entities are good, solid banks and that slumping stock prices make for strong investment opportunities.
- He added he believes the falling stock prices are based on irrational investor behavior and suspects that the decrease will "abate and reverse."
What we're watching: Hickman had no sense of whether the SVB office in Tempe would remain open, or what would happen to the bank's employees, building and local business if the feds find a buyer. for it.
- SVB is not an AzBA member.