Asia is casting a watchful eye over the fallout from California-based Silicon Valley Bank’s collapse, including in China where the tech-focused lender has a joint venture. 

On March 10, Santa Clara-headquartered Silicon Valley Bank (SVB) was placed into receivership by the Federal Deposit Insurance Corporation (FDIC). The FDIC created a new bank – the Deposit Insurance National Bank of Santa Clara – to hold SVB’s assets, according to a statement.

The move followed an announcement on March 8 by SVB Financial Group that it had sold $21 billion of securities from its portfolio at a $1.8 billion loss and would further sell $2.25 billion in new shares to shore up its balance sheet. Prominent venture capitalists pulled cash from SVB, according to a «Bloomberg» report citing unnamed sources, including Peter Thiel’s Founders Fund which «withdrew millions».

China Ripples

SVB’s collapse is raising alarms throughout the world. In Asia, South Korea’s finance ministry said it will monitor the issue around the clock, noting a possibility of higher volatility and uncertainties ahead. In China, there are worries due to SVB’s presence throughout the country, which includes a joint venture with Shanghai Pudong Development (SPD) Bank.

«SPD Silicon Valley Bank Co has always operated in a stable manner in accordance with Chinese laws and regulations, with a standard governance framework and independent balance sheet,» the joint venture said in a social media post on Saturday.

SVB has offices in Hong Kong, Beijing, Shanghai and Shenzhen.

16th Largest

SVB’s collapse is being closely watched worldwide due to the scale of the bank and its sizeable exposure to the tech sector. Some are calling the potential for a generational wipeout of startups and a multi-decade setback for the industry. 

At the time of SVB’s failure on March 10, it was Silicon Valley’s leading lender by deposits and the 16th largest lender overall in the US.

SVB was founded in 1983 and its main strategy involves collecting deposits from businesses financed through venture capital, most notably tech startups. Outside of the US, it also has offices in Canada, China, Denmark, Germany, India, Israel, Sweden and the UK.

What’s Next

The FDIC commenced an auction process on Saturday for SVB’s assets, according to a separate «Bloomberg» report. Final bids are due Sunday and a winner may not be known till late in the day.

And on Monday, FDIC will allow insured depositors – those with $250,000 or less in their accounts – to access their money at SVB.