How do you rebuild after a crisis? That’s a question SVB’s new CEO faces after the now infamous bank run.
Following the takeover of SVB by regulators, Tim Mayopoulos was appointed the CEO of a newly created, full-service, FDIC-operated Silicon Valley Bridge Bank, N.A. The goal is to get back all of the capabilities that clients had access to last week before all of the events unfolded, Mayopoulos explained during a Zoom call with bank clients on Wednesday.
“So obviously, the former CEO and CFO have left,” Mayopoulos said. “My responsibility is to evaluate the current management team. Obviously, I’m only in day three here, but overall, I’m quite impressed with the professionalism, the focus, the client centricity, and the resilience of this team.”
Be intentional and strategic
Simmons University president Lynn Perry Wooten and Wharton School dean Erika H. James are the coauthors of the book, The Prepared Leader: Emerge from Any Crisis More Resilient than Before. Wooten shared with me steps a CEO can take to evaluate a leadership team’s strengths following a crisis.
“CEOs should do two things,” Wooten explains. “First, they should assess how the team—individually and collectively—performed during the crisis. Second, CEOs should be intentional and strategic about what they want to see in their team moving forward, and examine how the current composition matches up against that.”
The key qualities CEOs should consider in evaluating the team’s overall strength—”its resiliency and ability to create a climate of trust and psychological safety,” she says.
“Team members should feel safe sharing ideas and constructive feedback,” Wooten says. “In addition, CEOs should determine how effective the team is at broad systems thinking, and its willingness to learn and seek out information, expertise, and knowledge from a broad range of sources. These competencies are the hallmarks of effective and productive teams.”
‘Give us a chance’
In a situation where a good portion of SVB clients lost confidence in the bank—depositors attempted to withdraw $42 billion in a single day—Mayopoulos, a member of the FDIC systemic resolution advisory committee, and a former Fannie Mae CEO, must instill confidence going forward.
“We very much want to rebuild trust with you,” he said on the call. “We understand that trust got eroded last week. We know that trust is fragile.”
“I guess all I would ask is, give us a chance to win back your trust and confidence,” he said. “Give us a chance to continue to serve your needs.”
So, how can a CEO build trust with clients? “It is impossible to rebuild trust following a crisis without first learning the lessons from the experience,” Wooten explains. “And, articulating how those lessons will be translated into action particularly as it relates to improved processes and systems.”
However, unfortunately, leaders too often fail to learn from a crisis, she says. They may “believe it won’t happen again, or it’s because they fail to seek out the diverse perspectives required to make necessary decisions and changes,” Wooten says.
She recommends that the CEO assemble a post-crisis review team that has different perspectives, knowledge, and expertise. “This team should help determine, document, and transparently share the lessons from the crisis, along with the actions that will be taken to ensure it doesn’t happen again,” Wooten says.
The bank is open for business, Mayopoulos said. And how leadership will perform is certainly under a microscope.
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“The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks.”
—BlackRock CEO Larry Fink wrote in a letter to investors Wednesday of SVB’s cleanup, Fortune reported. However, Fink warned that there's still fear of more banks failing. “Markets remain on edge. Will asset-liability mismatches be the second domino to fall?” he wrote.
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