New Delhi: Tim Mayopoulos, a former CEO of Fannie Mae, was appointed by the Federal Deposit Insurance Corporation on Monday to lead Silicon Valley Bank, a division of the now-defunct SVB Financial Group. He steps in after the startup-focused lender was shut down by regulators on Friday following a run on its deposits that left it with a lack of capital.
Before joining fintech Blend, Mayopoulos spent more than six years as the CEO of mortgage financier Fannie Mae. The greatest bank failure since the 2008 financial crisis, SVB’s failure has decimated stocks and raised worries about a global market contagion. (Also Read: HSBC Buys UK Division Of Silicon Valley Bank)
The sale of a $21 billion portfolio of securities that were available for sale last week, which resulted in a $1.8 billion loss and a sharp decline in deposits, prevented the bank from raising capital to cover the shortfall. (Also Read: Signature Bank 2nd Lender To Fail In Last Three Days, 3rd Largest Bank Failure In US History)
Also, the regulator has moved nearly all of the bank’s assets, including all insured and uninsured deposits, to a recently established bridge bank.
For the unversed, once Silicon Valley Bank went under, leaving behind billions of dollars in deposits, HSBC purchased the UK division of the firm. The UK branch of Silicon Valley Bank will be sold to HSBC UK Bank Plc, the Bank of England announced in a statement on Monday, following discussions with the Prudential Regulation Authority (PRA), HM Treasury (HMT), and the Financial Conduct Authority (FCA).
The FCA and PRA have given HSBC its approval. According to the UK central bank, the measure was taken to support financial system trust, stabilise SVBUK, assure the continuity of banking services, and minimise damage to the UK technology sector.
Jeremy Hunt, a South West Surrey MP, addressed the situation on Twitter “This morning, a private sale of Silicon Valley Bank UK to HSBC was made possible by the government and the Bank of England. Deposits will be safeguarded without assistance from the taxpayer. I promised to protect the IT sector yesterday, and we have been working hard to keep that pledge.”
This outcome comes after the Federal Deposit Insurance Corporation was designated to assume control of the lender’s deposits by California banking authorities on Friday after closing startup-focused Silicon Valley Bank. The last bank to fail that was insured by the Federal Deposit Insurance Corporation occurred in October of 2020, and SVB is the first one to do so in more than two years.