A day after US-based Silicon Valley Bank (SVB) shut down its operation, an Indian co-operative bank named ‘SVC Co-operation Bank Limited’ was forced to issue a statement following confusion on social media.
In a tweet, the bank said, “SVC Bank is completely unrelated to Silicon Valley Bank (SVB) which was based in California. We request our members, customers and other stakeholders not to pay attention to baseless rumours and mischief-mongering by unscrupulous elements insinuating similarities in brand names.”
The Mumbai-based cooperative bank further added, “SVC Bank reserves the right to take due legal action on rumour mongers for tarnishing its brand image.” It was established in 1906 and was formerly known as ‘The Shamrao Vithal Co-operative Bank Limited.
Important announcement#HumSeHaiPossible #SVCBank #Banking #SVC #Importantannouncement pic.twitter.com/p05lHBJm9w
— SVC Bank (@SVC_Bank) March 11, 2023
The SVC co-operative bank has been in operation for 116 years and has posted a net profit of ₹146 crores in Financial Year 2021-2022. It also informed that the bank has a total business of over ₹31,500 crores, 2300 employees, and is spread across 11 States in India.
Earlier in the day, a Twitter user ‘Love Reading Books (@share_books)’ had confused the Silicon Valley Bank with SVC cooperative bank. “Heard rumours about bank default. Please confirm,” it asked.
The Indian cooperative bank responded, “You have got the Twitter handle wrong. We are SVC Bank, erstwhile Shamrao Vithal Cooperative Bank, one of the leading & strongest cooperative banks in India with a legacy of 116 years. We have no relation to Silicon Valley Bank. To know more, visit svcbank.com”
You have got the twitter handle wrong. We are SVC Bank, erstwhile Shamrao Vithal Cooperative Bank, one of the leading & strongest cooperative banks in India with a legacy of 116 years. We have no relation to Silicon Valley Bank. To know more, visit https://t.co/NtHBRPdSCG
— SVC Bank (@SVC_Bank) March 11, 2023
The Collapse of Silicon Valley Bank
On Friday (March 10), the Federal Deposit Insurance Corporation (FDIC) announced the shutdown of the US-based Silicon Valley Bank (SVB) and the seizure of its assets.
The development was the result of the sudden shutdown of Silvergate Capital Corp and the unmindful fundraising of SVB, which created panic in the technology industry.
Founded in 1983, Silicon Valley Bank operated out of Santa Clara in California, and provided various services such as online banking, treasury management, and foreign exchange trade.
Reportedly, the crisis came to light on March 8 this year after SVB Financial Group (parent organisation of Silicon Valley Bank) announced a sale of $21 billion of its securities.
FDIC: “Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.” pic.twitter.com/trqGu83CUB
— Steve Lookner (@lookner) March 10, 2023
This was further worsened by the sale of company shares worth $2.25 billion to shore up its finances, prompted by high deposit outflows at the bank, caused by a downturn in the startup industry. As a result, the Silicon Valley Bank shares fell 60%, leading to a whopping loss of $80 billion.
To salvage the business, SVB CEO Greg Becker held a conference call with clients and venture capital investors, requesting them to “stay calm” to avoid further withdrawals.
However, it was to no avail. Many venture capitalists instead instructed portfolio companies to minimise their exposure to Silicon Valley Bank, withdraw their cash, and look for other lenders (thus further exacerbating the crisis).
In February this year, American business magazine Forbes placed SVB Financial Group in the 20th position in the list of ‘America’s Best Banks.’
