Silicon Valley Bank, a lender that was a fixture in the venture capital space for decades, collapsed on Friday. The California Department of Financial Protection and Innovation closed SVB and named the FDIC as the receiver. The trouble started on Wednesday after SVB suddenly announced a plan to raise billions in capital to cover big losses, setting off widespread panic among investors and the tech founders they backed. Shares of the company fell by around 60% in Thursday trading, another 20% in aftermarket trading, and were halted at the open on Friday. Hours later, amid reports that SVB was struggling to attract buyers in a sale, the government took control. In the run-up to all this, SVB’s proxy statement, filed earlier this month, reveals that the firm’s chief risk officer stepped away from her role early last year, and the bank did not hire a replacement until this past January.
Laura Izurieta stepped down from her role as CRO of SVB Financial Group in April 2022, and formally departed the company in October, according to an SVB proxy filing. The bank appointed her permanent successor as CRO, Kim Olson, in January of this year.
It is unclear how the bank managed risks in the interim period between the departure of one CRO and appointment of another. Representatives at SVB did not return Fortune’s request for comment.
A risk officer typically anticipates and manages regulatory, operational, competitive or other risks faced by a firm. SVB’s risk chief reports directly to a “Risk Committee,” which includes chairpersons of SVB’s Board and all the Board committees, in addition to the chief executive officer, according to filings from the company. The committee is responsible for hiring, evaluating and terminating the CRO, and as of 2023, was made up of seven members.
Silicon Valley Bank was without an official Chief Risk Officer during a difficult transition in the venture capital market—the industry SVB services so closely. At the beginning of 2022, as interest rates started to climb, venture capitalists pulled back and slowed down their pace of dealmaking, leaving the tech companies they backed with less capital to run their businesses. That directly influenced deposits at Silicon Valley Bank.
SVB is a pivotal part of the tech world, which has been rocked by mass layoffs in the past year. It says it has relationships with about 50% of America’s venture capital-backed companies, making the impact of its failure potentially far-reaching. Some other financial institutions have been feeling tremors from SVB’s fall, and Signature Bank, prominent in the crypto world, saw its shares drop over 30% while shares of First Republic, a regional bank, fell by 23% by midday Friday. Bill Ackman, founder of Pershing Square Capital Management, warned Thursday that SVB’s collapse may be another case of an institution being “too big to fail,” urging the government to consider bailing it out.
The sudden rush to safety by investors was so severe that SVB went from a market cap of more than $15 billion to seizure by the FDIC within days.
The FDIC released a statement that SVB customers would have access to their insured deposits on Monday, March 13. But how customers will be able to recoup their uninsured deposits is still unclear.
Jessica Mathews contributed to reporting
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