Silicon Valley Bank's ex-CEO in Hawaii amid bankruptcy protection application
Silicon Valley Bank (SVB) was a key player in the start-up ecosystem for three decades. On March 10, the bank collapsed following its failure to raise capital. The bank's swift rise and even swifter fall were overseen by Greg Becker, its ex-CEO. Per the New York Post, he has now fled to his luxurious townhouse in Hawaii amid the bank's crisis.
Why does this story matter?
SVB was the 16th largest bank in the US. The bank has made a name for itself by betting on start-ups with potential while traditional banking institutions shied away from them. The bank's fall stems from earlier investment decisions. The immediate cause, however, was an effort by the bank to raise capital to plug its losses.
SVB hit a roadblock in 2022
Becker was at the helm of SVB from 2011 till its fall. He was responsible for making SVB the juggernaut it later became. His strategy of betting on high-risk but high-potential start-ups paid off for the longest time. Well, until it did not. After a continuous rise, the bank hit a roadblock in 2022 as tech stocks struggled.
Bank didn't have a risk officer for majority of 2022
In 2022, the bank's shares fell 66%. Interestingly, for the major part of last year, SVB did not have a risk officer. The absence of a risk officer was evident in the bank's strategy during the tech sector's struggle. The bank kept betting that interest rates would go down, which of course, turned out to be wrong.
Becker and his lieutenants are responsible for the bank's crisis
Becker and his top lieutenants CFO Daniel Beck and president Michael Descheneaux were responsible for treading the bank's path. Therefore, every decision that the bank made, starting 2022 till March 10, 2023, is on them. However, none of them have said a word publicly since then. Instead, Becker was spotted wearing shorts and flip-flops while strolling through Lahaina.
Why did the ex-CEO go to Hawaii?
What does Becker's journey to his $3.1 million townhouse in Hawaii signify? Did he flee, or does he simply want to stay away from the chaos? These are questions in everyone's head. For all we know, it could be the latter. However, Becker did not help his case by selling $3.5 million in common stock two weeks before the bank shut down.
Becker is yet to take accountability for SVB's failures
Did Becker know beforehand the bank was going to fall? Is that why he sold the common stocks? Again, we do not know the exact answer to these questions. And Becker is yet to take accountability for his actions. The lack of communication on his part is leading to more speculations than he would have liked. All because of failure to be accountable.
SVB Financial Group filed for bankruptcy protection
Meanwhile, Silicon Valley Bank Financial Group filed for bankruptcy protection days after the bank was taken over by US regulators. The bank filed for court-supervised reorganization under Chapter 11 of the United States Bankruptcy Code in the bankruptcy court for the Southern District of New York. The application is filed to seek buyers for its assets.
