First Citizens president Peter Bristow says it will stick to the failed bank’s model while trying to restore confidence
“[SVB] was the number one bank in tech and life sciences for over 30 years and suddenly that went away, so we’ve spent a lot of time trying to give people confidence that we’re in the bank and plan to continue to run the model they were running,” Bristow said.
As an east coast bank with little venture capital experience, some Silicon Valley investors and founders are sceptical that First Citizens will provide the same critical infrastructure to the tech start-up scene. SVB was known for making risky loans to struggling businesses based on decades of goodwill with their venture capital backers.
It will have to incentivise SVB’s bankers to remain at the bank in order to preserve those relationships as rivals try to muscle into its market, at the same time as their pay packages have been stripped of SVB’s lucrative share awards. HSBC, which acquired SVB’s UK business, poached 40 of SVB’s US bankers this month, while MUFG hired 20 staffers last week.Keeping its customers could prove even harder. SVB has continued to lose deposits in the weeks since the bank run on March 9.
The tech downturn could put First Citizens in a tricky position as it looks to draw Silicon Valley’s top tech investors back into the bank. Nonetheless, SVB’s venture debt business had become a critical part of Silicon Valley’s financial infrastructure. As one venture capitalist put it: “We need SVB to help us with companies that are struggling.”
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