Silicon Valley Bank crisis: Few days before collapse, SVB was ranked among America’s best banks

The now-collapsed Silicon Valley Bank (SVB) was recently proud to make Forbes magazine's annual ranking of the best banks in America, for the fifth year in a row. The bank also made their inaugural Financial All-Stars list. However, this celebration was short-lived, as regulators took control of the bank just a few days later due to its inability to meet withdrawal demands from depositors.

SVB Financial tweeted earlier this week: “Proud to be on @Forbes' annual ranking of America's Best Banks for the 5th straight year and to have also been named to the publication's inaugural Financial All-Stars list.”

Netizens on Twitter have since destroyed the post with memes and pay-to-play allegations.

A user tweeted: "This has to be the worst-aged tweet in the fastest time in the history of Twitter." "These rankings or ratings from agencies are so much away from reality at times. Time for introspection from such organizations," another user tweeted.

Silicon Valley Bank's collapse was the largest bank failure since the 2008 Washington Mutual incident and the second-largest in U.S. history. The bank's failure to meet withdrawal demands caused a run on the bank, which led to the California Department of Financial Protection and Innovation (DFPI) taking over the bank's operations after it went insolvent. Since then, the bank's assets have been handed over to the Federal Deposit Insurance Corporation (FDIC), which will begin returning Silicon Valley Bank customers' insured deposits on Monday.

Also read: FDIC takes control of collapsed Silicon Valley Bank, retains employees for 45 days at 1.5x salary

Silicon Valley Bank was the nation's 16th largest lender before the shutdown, and its collapse has had a profound impact on the tech industry, as it was a major financier of tech startups. Hundreds of companies, including retailer Camp and coffee company Compass Coffee, have been affected by the shutdown, as they say they have not been able to access their deposits.

The Fed's aggressive interest rate hikes over the past year had a noticeable impact on the start-up industry, in which Silicon Valley Bank played a significant role. The bank's ability to meet withdrawal demands was hampered by the high-interest rates, which had limited financial conditions. Additionally, the bank suffered a $1.8 billion loss on Treasury bonds that were devalued due to the Fed's rate hikes.

According to experts, the bank's downfall seems to be attributed to management failures rather than indicating broader issues in the financial services sector. The bank had wrapped up most of its deposits in long-term treasury bonds, and higher interest rates, falling tech stocks, and industry layoffs each put pressure on the bank.

Also read: Silicon Valley Bank fallout: Nazara Technologies' subsidiaries hold Rs 64 crore in cash at collapsed lender