Silicon Valley Bank crisis: International transfers disabled, founders in US successful in wiring money

Startup founders have been in a huddle since Friday night when their default banking partner Silicon Valley Bank (SVB) was placed under the receivership of the US Federal Deposit Insurance Corporation (FDIC). While some companies could move their funds out before SVB’s assets were seized, some had their wire requests stuck at processing, until bank log-ins became active again on Monday afternoon, following the US regulators’ announcement that all depositors’ money would be safely guarded.

Also read: Around 800 employees at Silicon Valley Bank's India office face uncertainty
 

As soon as it was market hours in the US on Monday, founder groups in India started buzzing with questions on accessibility of the SVB website and state of account log-ins. While some founders could successfully wire the money to other bank accounts in the US, several had their requests from last week cancelled. “All pending transactions that have not been processed since, and including, Thursday (March 9th) will not be processed. Clients wishing to process those previously initiated transactions will need to resubmit those requests,” SVB notified its depositors.

Some founders could log in and initiate transfers today, while some others outside the US continued to face technical glitches. SVB has disabled international transfers for now, “while USD wire transfers and Bill Pay within the United States remain available,” it alerted users on the website. “Wire transfers that were initiated after March 9, 2023 that have not been marked as completed or sent will need to be initiated again,” it added.

Some founders in India have worked out a way to bypass this to move funds outside the US. “You can transfer to another [bank] account in the US, and use that to do international wire transfer to India,” sources told Business Today. Several startups are moving to either one of these four US banks - Mercury, Brex, Chase or BoFa, with Mercury emerging as the most popular option. “Mercury insures up to $3 million in deposits. They just released a vault today,” said one founder. Brex, meanwhile, said it insures $2.25 million in deposits.

One founder, however, shared that even though he could create a Mercury account as an alternative, “all tier 1 bank processes are still stuck”. Add to that, Mercury also adds a 1 per cent forex charge on transfers to India.

In some cases, founders reported that their wires were being shown as “sent” in status, but have not been received by the recipient bank. Several SVB users also said that new wires were being shown ‘In Process’, but could typically take one business day to be completed.