‘Sweeping’ threat or ‘minor bump’? Philly investors weigh in on Silicon Valley Bank wreck
March 14, 2023
This article was first published by The Philadelphia Inquirer.
Bank stocks are down 20% since last week, as the Federal Reserve arranged a rescue of Silicon Valley Bank over the weekend. Regional lenders like WSFS and M&T were hardest hit, on concerns they will have a tough time coping with weaker commercial real estate values as interest costs rise and offices stay vacant.
The Inquirer talked to five local financial experts about the economic impact of Silicon Valley Bank, its collapse, and the Fed’s reaction. Their answers have been edited lightly for clarity and length.
‘A tough weekend’
Mike DiPiano, managing partner and co-founder, NewSpring Capital, a $3 billion private investment firm in Radnor
"We had nine companies that we support (out of more than 100) who had accounts with Silicon Valley Bank. The CEOs were calling us: “What should we do?” Mostly they had other accounts they could transfer funds to, but with two we had a tough weekend figuring things out. When the email came through (that the government would oblige solvent banks to back Silicon Valley’s uninsured deposits), everyone got a cocktail. Silicon Valley Bank was unique, with the way they offered deposit services, lines of credit, lending relationships, to tech and biotech companies. But (in recent times) other banks have been offering those services — groups at Comerica, Bridge Bank, PacWest, all now have accounts with our companies. In the past week we have been inundated with calls from other banks, starting with the Philadelphia office of Bank of America. And since this started, everybody in our industry has been more focused on making sure companies don’t rely on just one account — and on getting the burn rates (losses) under control."