Silicon Valley Bank’s (SVB) failure has shocked the global financial market, and depositors are concerned of their funds trapped in the failed institution. With the SVB being the largest lender to some of the world’s largest tech companies and startups, the downturn has compelled stakeholders to act quickly to secure their funds. Many investors have lost fortunes as a result of the failure, which has been dubbed the largest in US financial failure history since 2008. One of these investors expressed his thoughts on social media.
Alexander Torrenegra, chief executive officer of the online employment website Torre, claims to have lost a large portion of his savings after SVB’s stock, which he had purchased, plummeted 60% on Thursday and its bonds experienced record declines.
Torrenegra used Silicon Valley Bank as his primary bank for two of his companies, personal savings and mortgage. He says that on Thursday morning, he received a suggestion to withdraw money from SVB for safety.
He immediately cancelled meeting and asked his wife, Tania, and his team to transfer fund digitally (wire) out to other banks. But soon came the hindrances, “We can’t get the money out of any of the accounts. For our personal savings, we don’t have other bank accounts readily available. For one of the companies, the permissions are not set up to allow such a significant exit of money. We can only get half of the money out. We wire it to Ameritrade (stock broker), as we don’t have any other bank account set up. For the 2nd company, the banking credentials had been changed. I cannot log in,” he recalls.
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As panic set in, they were able to contact an SVB agent, who reset their credentials for the second company. They also signed numerous documents to open a personal bank account with UBS bank and requested that all funds from the second company be wired to a financial technology company Mercury.
But then Torre’s CEO made a big mistake, he bought shares of SVB at a significant discount because he believed the bank would recover. By Friday morning, the federal government had taken control of SVB, rendering the shares purchased the day before likely worthless.
He cancelled all morning meetings in order to concentrate on the issue and held a town hall with their team to outline the situation. They waited anxiously all day, assisting other business owners and responding to investor questions.
Later, he got consolation that some of his money is still safe. “Figure that the money for the company with the pending wire is safe. It will be available as of Monday. Unfortunately, for our personal savings, only a portion is safe. We may recover most of the money. The percentage, however, remains unclear. It may take years,” he writes.
By Saturday, they realized that there was nothing of value by focusing on the topic and decided to go back to what they could control. “We shouldn’t invest too much time thinking about them. Or trying to predict the markets. Time to go back to what we can control: the execution of our companies. Continue pushing forward. Persist. Persist. Persist,” he adds.
Silicon Valley Bank collapse
California regulators put the US lender into receivership, sending shockwaves throughout the global financial market. Following SVB’s unsuccessful share sale attempt, startups began withdrawing funds at the urging of venture capital firms. The failure has been described as the largest financial institution failure since the 2008 collapse of Washington Mutual at the height of the financial crisis.