Q.1 Discuss the modus operandi and profile of SVB?

Silicon Valley Bank (SVB) is a commercial bank based in California, USA, that primarily
focuses on offering financial services and solutions to technology and life sciences
companies, as well as private equity and venture capital firms.

Modus Operandi: SVB has a unique business model that focuses on understanding and
catering to the specific needs of technology and life sciences companies. The bank offers a
range of financial products and services, including commercial banking, investment banking,
asset management, and global payment and FX services.

One of the primary ways that SVB differentiates itself from other banks is through its deep
knowledge of the technology and life sciences sectors. SVB employs experienced
professionals who specialize in these industries, and they use their knowledge and networks
to help clients achieve their goals. The bank also offers a range of resources and events for
entrepreneurs and innovators, such as educational workshops, networking events, and
industry insights.

Profile: Silicon Valley Bank was founded in 1983 by a group of entrepreneurs in Silicon
Valley who were looking for a bank that understood the unique needs of the technology
industry. Today, the bank has offices in major innovation hubs around the world, including
the US, UK, Israel, China, and India.

SVB has a strong reputation for working with startups and emerging companies, but the bank
also serves larger, more established businesses in the technology and life sciences sectors.
The bank has over 30 years of experience working with these industries, and it has developed
a deep understanding of the unique challenges and opportunities they face.

Overall, SVB is known for its expertise, innovation, and focus on helping technology and life
sciences companies achieve their goals. Its modus operandi and profile reflect a strong
commitment to supporting innovation and entrepreneurship, and it is widely regarded as a
leading bank in the technology and life sciences sectors.
Q.2 Explain the impact of SVB crisis on India and worldwide.

The collapse of Silicon Valley Bank (SVB) in March 2023 has had a significant impact on the
Indian startup ecosystem, as well as on the global economy. SVB was a cornerstone of the US
technology and startup industry, and its failure has caused a ripple effect throughout the
world.

In India, the impact of the SVB collapse has been particularly severe. Hundreds of Indian
startups had millions of dollars stuck in accounts at the bank, and without the intervention of
the US government, these businesses were facing mass layoffs and, in some cases,
extinction. 

Startup firms backed by Silicon Valley accelerator Y Combinator (YC) were particularly
affected, with 40 YC-backed Indian startups each having deposits ranging from $250,000 to
$1 million, and more than 20 having deposits of over $1 million each. 

The collapse of SVB has also had a significant impact on the sentiment of the Indian equity
markets. Analysts have noted that the collapse of SVB is not likely to have a major contagion
effect in Asia, but it could be seen as a “warning”—especially for economies that are heavily
dependent on foreign capital. 

The global impact of the SVB collapse has been felt in a variety of ways. In the US, the
Federal Deposit Insurance Corporation (FDIC) has taken over the bank and is working to
resolve the situation.

The SVB collapse has also had a significant impact on the venture capital industry. Many
venture capital firms had invested in SVB, and the collapse of the bank has caused a
significant disruption in the industry.

Finally, the SVB collapse has had a major impact on the global economy. The collapse of the
bank has caused a significant disruption in the flow of capital, and has caused a significant
drop in confidence in the banking system. 

In conclusion, the collapse of Silicon Valley Bank has had a significant impact on India and
the global economy. The collapse of the bank has caused a significant disruption in the flow
of capital, and has caused a significant drop in confidence in the banking system. The
collapse of SVB has also had a significant impact on the sentiment of the Indian equity
markets, and has caused a significant disruption in the venture capital industry.
Q.3 Discuss the reasons (Int and ext) of collapse of SVB.

The collapse of Silicon Valley Bank (SVB) in March 2023 was a major shock to the tech and
startup industry. There were several internal and external factors that contributed to the
collapse of the bank.

Internal Factors:

1. Mismanagement: One of the key internal factors contributing to the collapse of SVB
was mismanagement. The bank had made several risky loans to startups that had
failed, which had led to significant losses for the bank. Additionally, the bank had not
properly managed its own risk exposure, which had further exacerbated the situation.

2. Over-Expansion: Another internal factor contributing to the collapse of SVB was

over-expansion. The bank had aggressively expanded its operations in recent years,
with a particular focus on the Indian market. However, this expansion had come at the
cost of quality control, and the bank had taken on too much risk in its lending
practices.

3. Weak Capital Position: The bank's capital position was not strong enough to absorb
the losses it incurred. The bank had relied heavily on its ability to raise capital from
the markets, but investor confidence in the bank had been eroded by its risky lending
practices and over-expansion.

External Factors:

1. Economic Downturn: One of the key external factors contributing to the collapse of
SVB was the economic downturn. The global economy had been in a state of turmoil
for several years, and this had put significant pressure on the bank's lending practices.

2. Regulatory Risk: Another external factor contributing to the collapse of SVB was
regulatory risk. The bank had come under scrutiny from regulators in recent years,
with concerns being raised about its lending practices and risk management. This had
led to increased regulatory oversight, which had further eroded investor confidence in
the bank.

3. Global Political Risk: The global political climate had also played a role in the
collapse of SVB. The rise of protectionism and nationalism in several countries had
 led to a decrease in cross-border lending, which had hurt the bank's ability to raise
capital.

In conclusion, there were several internal and external factors that contributed to the collapse
of Silicon Valley Bank. The bank had made several risky loans to startups that had failed, and
had over-expanded its operations at the cost of quality control. The bank's capital position
was weak, and the economic downturn, regulatory risk, and global political risk had all put
significant pressure on the bank's lending practices. Ultimately, these factors led to the
collapse of the bank, which had a significant impact on the tech and startup industry, as well
as the global economy.
Q.4 Analyse the Financial Statements of SVB bank and explain how this bank was prone to
failure.

SVB Financial Group, formerly known as Silicon Valley Bank, was a major lender to the tech
industry for three decades before its collapse on March 10, 2023. The bank’s assets, which
include loans, more than tripled from $71 billion at the end of 2019 to a peak of $220 billion
at the end of March 2022, according to financial statements. Deposits also increased from $50
billion to $175 billion over the same period.

The bank’s financial statements reveal that its assets were heavily concentrated in the tech
industry, which was hit hard by the pandemic. In addition, the bank’s loan portfolio was
highly leveraged, with a loan-to-deposit ratio of 1.25. This means that the bank was relying
heavily on borrowed funds to finance its operations, which increased its risk of default.

The bank’s financial statements also show that its net income decreased significantly in the
year leading up to its collapse. In the fourth quarter of 2022, the bank reported a net loss of
$1.2 billion, compared to a net income of $1.1 billion in the same quarter of 2021. This was
due to a decrease in net interest income, as well as an increase in loan losses and non-interest
expenses.

The bank’s financial statements also reveal that its liquidity position was weak. In the fourth
quarter of 2022, the bank’s liquidity coverage ratio (LCR) was 0.99, which is below the
regulatory minimum of 1.0. This means that the bank did not have enough liquid assets to
cover its short-term liabilities.

The bank’s financial statements also show that its capital position was weak. In the fourth
quarter of 2022, the bank’s common equity tier 1 (CET1) ratio was 8.3%, which is below the
regulatory minimum of 10%. This means that the bank did not have enough capital to cover
its losses.

Overall, the financial statements of SVB Financial Group reveal that the bank was heavily
exposed to the tech industry, had a highly leveraged loan portfolio, and had a weak liquidity
and capital position. These factors combined to make the bank vulnerable to failure, which
ultimately led to its collapse in March 2023.