Source: Securities Times

The impact of the incident has been simmering since Silicon Valley Bank (SVB) was shut down by financial regulators on March 10 because it was insolvent.

The overnight bankruptcy of Silicon Valley Bank, the 16th largest bank in the United States, has cast a cloud over technology investors and entrepreneurs.

Y Combinator CEO, a famous start-up incubator in the United States, even called the consequences of Silicon Valley banks a "extinction event for startups." he said that all the money of more than 1000 startups under the YC 1 Universe 3 program is in Silicon Valley banks, and they can't even pay their wages and rent next week. Circle, the issuer of stable currency USDC (USD Coin), said in a series of tweets (Twitter) that Silicon Valley Bank, one of the six banking partners used by Circle, is responsible for managing about 25% of USDC's cash reserves, and that $3.3 billion of about $40 billion in USDC reserves remains in Silicon Valley Bank.

China International Capital Corporation analysis believes that, in short, this is a bank liquidity crisis caused by rising interest rates. SVB represents a financing business model deeply tied to the technology industry; the impact of the SVB incident on the technology industry may not be underestimated, and some technology companies may face a high degree of cash flow tension and do not rule out the risk of bankruptcy.

In this context, the impact of the SVB incident on domestic companies has also attracted attention. following the emergency response from Pudong Development Silicon Valley Bank, on March 12, many companies, such as Noah Holdings, Genting Xinyao, and Jiaxi Pharmaceutical, have analyzed the relevant impact, and some companies have hastily distanced themselves from the relationship in order to avoid being "accidentally injured."

A number of Hong Kong stock companies responded to the impact

In response, a number of listed companies issued announcements in response on March 12, among which Noah Holdings (06686.HK) said late that day that it had learned about the recent closure of Silicon Valley Bank ("SVB") and the appointment of the Federal Deposit Insurance Corporation as the receiver. The company currently has less than $1 million in cash and cash equivalents in SVB, accounting for less than 0.2% of its total cash and cash equivalents, so it is considered that any liquidity risk it faces as a result of the SVB takeover process is not significant to the company's business operations or financial position.

01952.HK, a biopharmaceutical company specialising in the development, manufacture and commercialization of innovative drugs and vaccines, said on March 12 that it had conducted a comprehensive analysis of its exposure to the SVB incident and announced that it had only a very small amount of cash in the bank (well below 1 per cent of the company's total cash). At the same time, the company is expected to recover most of its deposits in Silicon Valley banks through insurance from the Federal Deposit Insurance Corporation (FDIC) in combination with other compensation measures. The amount uninsured by FDIC is about US $1 million, and Genting has no deposits with Bank of America Corporation other than Silicon Valley banks. The company believes that the impact of the Silicon Valley banking incident on its business is very limited.

Genting Xinyao has ample cash reserves and is currently expected to have a cash balance of about $430 million. The company has always adhered to and implemented a sound financial policy, with assets scattered in multiple banks and accounts. " The new name of Yunding.

Gacos Pharmaceutical (1167.HK) is committed to providing breakthrough treatment for patients. The company announced that as of the evening of March 9, 2023 (US Eastern time), the group's cash deposit balance in Silicon Valley bank was less than 400000 US dollars. The company has carried out all Silicon Valley bank balance transfer procedures on the evening of March 9, 2023 (US Eastern time). The Silicon Valley bank incident will not have a significant adverse impact on the group, and the group's business operations and financial conditions remain normal.

These companies are worried about being "accidentally injured".

There are listed companies in order to avoid being "accidentally injured", choose to come forward to clear the relationship. For example, 6855.HK said in an announcement on the evening of March 12 that in view of the recent closure of Silicon Valley Bank (Silicon Valley Bank), the company hereby declares that it has not had any business cooperation with Silicon Valley Bank or its affiliates since its inception. In addition, as of the date of this announcement, the company does not have any deposits with Silicon Valley Bank of America or its affiliates.

In fact, before Yasheng Medicine, Meituan (03690.HK) also made relevant clarifications to the outside world.

Meituan Capital Market Department replied to the inquiring investors in an email on March 11 that Meituan had no deposits in Silicon Valley banks, so the recent Silicon Valley bank incident had no impact on the company. At the same time, the relevant person in charge of Meituan said that the screenshot of "Silicon Valley Bank Rights Protection Group" released by Meituan CEO Wang Xing on the 11th is not true.

Among the companies that have responded recently, the one that has attracted the most attention is the situation of Pudong Development Silicon Valley Bank.

In this regard, on the morning of March 11, Pudong Development Silicon Valley Bank said in a notice, "Pudong Development Silicon Valley Bank was established in August 2012, is a legal person bank registered in China."

Pudong Development Silicon Valley Bank has a standardized corporate governance structure and an independent balance sheet. As China's first technology bank, Pudong Development Silicon Valley is committed to serving Chinese science and technology start-ups and operating steadily in accordance with Chinese laws and regulations. "

Enterprise investigation shows that Pudong Development Silicon Valley Bank is set up by two shareholders, Silicon Valley Bank and Pudong Development Bank, and both hold 50% of the shares, with a registered capital of 2 billion yuan and registered in Shanghai.

Pudong Development Silicon Valley Bank said in its 2021 annual report that relying on the advantages of both shareholders, the bank will focus on providing commercial banking services to China's technology and innovation companies.

The strategic goal is to become a model for Bank of China Ltd. to provide loans and risk management to China's fast-growing scientific and technological innovation enterprises, and to become a positive driving force for the construction of China's innovation ecosystem.

In terms of performance, the operating income and net profit of Pudong Development Silicon Valley Bank in 2021 were 487 million yuan and 51.25 million yuan respectively.

A reporter from Securities Times e called the headquarters of Pudong Development Silicon Valley Bank on March 12, hoping to know the details of the impact of the incident on the bank itself and its customers, but the phone was not answered.

Joint statement of 325 VCs, including Sequoia, and 650 founders

As of March 12, 325 venture capital firms, including Sequoia Capital, had signed a joint declaration of support for Silicon Valley Bank, and 650 founders who employed more than 22000 people also signed a statement asking regulators to prevent the disaster.

The statement from the venture capital community, led by venture capital firm General Catalyst, said: "Silicon Valley Bank has always been a trusted long-term partner for the venture capital industry and our founder. For 40 years, it has been an important platform for serving American start-up industries and supporting the innovation economy. " "the events of the past 48 hours have been deeply disappointing and worrying. If SVB is acquired and properly capitalized, we will strongly support and encourage our portfolio companies to restore their banking relationship. "

Citing foreign media "Fortune" informed sources, local time on the evening of March 10, a number of well-known investors held a series of meetings through Zoom. General Catalyst CEO Hemant Taneja tweeted the announcement after the meeting, and as of March 12, 325 institutions, including Sequoia, had signed the agreement.

Wells Fargo & Co responds to rumors

It is worth noting that following repeated hot searches by Silicon Valley banks, Wells Fargo & Co, the fourth largest bank in the United States, has also had negative news recently.

According to media reports, some Wells Fargo & Co customers in the United States woke up on Friday morning to find that their savings in their checking accounts were "gone."

In a statement to the media, the bank admitted that some direct deposit transactions did not appear in the accounts and that they were working on solutions. But Wells Fargo & Co said the accounts were safe and reliable. The loss of deposits is due to an unknown technical problem.

At present, the situation of Wells Fargo & Co is not known, but some financial analysts have pointed out that the recent bank thunderstorm is due to the liquidity problem caused by the Federal Reserve's continuous interest rate hike, and this problem is by no means alone in Silicon Valley banks. it is likely to evolve into a systematic problem.

Edit / jayden