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The Silicon Valley Bank Situation: Move Quickly to Avert Crisis

Vasu Gupta • December 25, 2023
For many banks, including hashtag#SVB, securities purchased were of meagre yields, such as 10-year US treasury bills yielding less than 1%. However, rates have risen to 4.57% (most recently), creating sizeable differences. SVB, to maintain cash reserves, had to take an 8.6% haircut on selling USD 21bn+ securities due to the demand-supply imbalance, booking a loss of USD 1.8bn. So, when news circulated that things at SVB were looking shaky, events snowballed following a significant loss in SVB's portfolio.

#WhatIsHappening ⁉️ SVB has been officially shut down, accounts have been frozen, and FDIC has taken over the operations. Most founders can't withdraw funds, creating an environment of chaos and massive panic.

#OurAdvice 📨

1) Take a screenshot of your SVB account:
Keep some asset proofs ready if things go south, and also download your latest bank statements for future use.

2) Federal Deposit Insurance Corporation #FDIC Intervention:
The FDIC created the hashtag#DINB to transfer all insured deposits of SVB immediately. We expect all eligible accounts to have access to, at the very least, USD 250k (per federal limit) by Monday. Go to the following link for claims: https://lnkd.in/dUkgSYES

3) Open secondary US accounts:
Also, you are advised to withdraw your funds from SVB as soon as they become available and transfer them to established banks in the US (such as HSBC, Chase, or Goldman Sachs). Do the same urgently if you are banking with the First Republic (FRB), Mercury or the Brex of the world. SRGA Global can help you open an account with an established bank in the US. If you wish to remain with your current banking partner, which may be under the radar, please move funds to multiple accounts and ensure you use only up to the FDIC limit.

4) Bring the money back to India:
Suppose you have a USD 250k balance coming to you on Monday and no other advised banking partner in the US. In that case, fulfil all possible vendor payments and bring the remaining money to India as an advance for Software Development Services under the code P0802. These funds can earn interest and, if required, can be returned to the US. You might book a slight loss due to currency conversion rates, but this is very nominal compared to the risks on the table right now. SRGA Global can help you strategize and open new bank accounts in India.

5) Check your expenses & runway:
Ensure you have salary and vendor payments money in Indian banks and expand your runway.

#FinalThoughts 🫱🏻‍🫲🏽

SVB, for 40+ years, has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US. If SVB were to be purchased and appropriately capitalized, VCs would strongly support and encourage their portfolio companies to resume their banking relations.
By Vasu Gupta December 25, 2023
COP28 marks the conclusion of the first-ever global stocktake, sounding a reminder that we are falling short of the Paris Agreement's 1.5°C target. As governments convened, decisions taken here fuelled ambitious climate plans to secure a sustainable future. SRGA Global consistently and actively participated in COP events. This engagement reflects our unwavering commitment to addressing climate change and sustainable development issues that affect India and UAE, and their ongoing journey towards balancing economic growth with climate commitments under the Paris Agreement. Road from B20 India to COP28, UAE Under the theme R.A.I.S.E - Responsible, Accelerated, Innovative, Sustainable, and Equitable businesses, B20 India offered empowering recommendations for business leaders to adopt responsible, expedited, innovative, sustainable, and equitable practices. There is an agreement across forums on tripling renewable energy capacity globally by 2030, driving accelerated energy transitions, strengthening bilateral and multilateral partnerships between stakeholders towards enhancing business-led climate action and unlocking increased climate finance through leveraging of private capital through various means. Effective cooperation among governments, businesses, and international stakeholders is necessary to tackle the pressing challenges of our time. Additionally, the B20 India 2023 Action Council on ESG in Business Policies highlighted the necessity of a standardised ESG framework and advocated for a resilience and disaster management framework to mitigate climate impacts, especially in the Global South. Key Highlights from India Perspective: COP28 should prioritize workforce capacity building, focusing on knowledge development and gender inclusivity. Ensure MSMEs have a dedicated voice at COP28 to address their unique challenges in transitioning to a low-carbon economy. The inclusion of MSMEs can strengthen COP28's goal to triple Renewable Energy (RE) usage and double energy efficiency (EE) by 2030. Leveraging COP28 as a platform to foster interactions with the corporate sector and to present their unique perspectives on various initiatives such as the Global GDA, the Industrial Transition Accelerator (ITA) and the Charter for Oil and Gas Decarbonization (COGD). Discussions on Articles 6.2 and 6.4 should provide clarity to all stakeholders, fostering increased climate finance flows and technology access in developing countries. There is an immediate need for well-defined standards and protocols that take into consideration inclusion, equity and parity. This is needed to bring about a well-oiled voluntary carbon market mechanism that will collectively work towards sustainable goals. Considering the evolving landscape we are operating in, it is imperative that we define and improvise on the go. At COP28 UAE, SRGA Global stands at the forefront of environmental stewardship and corporate responsibility. Our growing domain knowledge in ESG standards and frameworks positions us uniquely to guide companies through comprehensive ESG Audits and Advisory. Partner with us for insights and strategies that align with the latest in sustainable development and responsible business practices.
By Vasu Gupta December 25, 2023
As we illuminate our office with the vibrant lights of Diwali 2023, we're not just sparking diyas, but igniting the spirit of camaraderie and joy. This year is particularly momentous as we mark three decades of unwavering service, trust, and collaboration. As our teams come together in celebration, dancing to the rhythm of success and unity, we're reminded that SRGA Global is more than just a consulting firm; it's a family that thrives on mutual respect and shared goals. Here's to 30 years of SRGA Global - where tradition meets ambition, and celebrations are just as important as innovations. 🫱🏻‍🫲🏽
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