Customers line up outside First Republic Bank to take their money out – after SVB bank collapsed

Dozens of customers lined up outside a First Republic Bank in Northern California on Saturday eager to withdraw their funds after the collapse of Silicon Valley Bank.

Fears arose after SVB’s demise for the future of First Republic as analysts pointed to similarities between the estimated value of its assets and their actual value.

Brentwood is located in the Golden State wine-growing community just south of Napa Valley, and the area’s vineyards, notably Bloomfield, Tamayo, and Hannah Nicole, have gained international attention in recent years.

The news of the collapse of Silicon Valley Bank shocked the wine industry. It had been the primary financial institution for California wineries for nearly three decades.

The California Department of Financial Protection and Innovation closed the bank on Friday after depositors, worried about the financial health of the lender, rushed to withdraw their deposits. The frenzied two-day run on the bank stunned observers and stunned the markets, wiping out more than $100 billion in market value for US banks.

On Friday night, thousands of wineries discovered that their accounts were completely blocked with no clear timeline for when they would be able to access their funds.

First Republic issued a statement on March 10 seeking to reassure investors, noting its “continued safety and stability and strong capital and liquidity positions.”

The bank, founded in San Francisco in 1985, has 80 branches in 11 states across the country, primarily on the West and East coasts.

The main difference between the two banks is that Silicon Valley Bank’s debt was in securities, while First Republic’s was in loans.

Similarly, both First Republic and Silicon Valley Bank rely heavily on customer deposits: at First Republic, wealthy individuals, and at Silicon Valley Bank, tech startups and venture capitalists.

With interest rates rising, First Republic customers have plenty of other places to park their cash and might try to withdraw it.

California Governor Gavin Newsom said Saturday that he is talking to the White House to help “stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods and the entire ecosystem of innovation that has served as a tent for our economy”.

US customers with less than $250,000 in the bank can count on insurance provided by Federal Deposit Insurance Corp. Regulators are trying to find a buyer for the bank in the hope that customers with more than that can recuperate.

Kendra Kawala, co-founder of Maker, a Bay Area canned wine company, called the news “jarring” and noted that Silicon Valley Bank was “the gold standard within the wine industry.”

When he founded Maker four years ago, choosing the right banking partner was almost a no-brainer.

“Technology and venture firms are well capitalized, but this could be a really serious reckoning for independent wineries,” Kawala said. ‘We have never experienced anything like this. Nobody knows how it will develop.

Bodegas accounted for 2 percent of the bank’s total lending business, but the ramifications are far-reaching, including the inability to pay employees, bills or credit card payments.

Silicon Valley Bank, the 16th largest bank in the country, has provided more than $4 billion in loans to wineries and vineyards since 1994.

“This is a huge disappointment,” said winemaker Jasmine Hirsch, general manager of Hirsch Vineyards in California’s Sonoma County.

Hirsch said he hopes his business is doing well. But he worries about the broader effects for smaller vintners seeking lines of credit to plant new vines.

“They really understand the wine business,” Hirsch said. “The demise of this bank, as one of the largest lenders, will have an absolute effect on the wine industry, especially in an environment where interest rates have risen.”

Silicon Valley Bank’s wine division founder Rob McMillan, who would write the annual reports, has so far refused to comment on the situation, but has built the bank’s reputation as one of the few institutions that truly understands the industry. Of the wine.

The data collected by the bank was a data source that wineries would use to make decisions about future sales, marketing, and farming.

The bank had a unique perspective on the industry because of the number of clients it helped finance.

The loss of the annual report in particular means that wineries will not have access to the comprehensive analysis that many used to make their decisions.

On Friday, the Federal Deposit Insurance Corporation, Santa Clara National Bank, created a new bank, which will hold Silicon Valley Bank’s remaining deposits and assets.

But only accounts containing $250,000 or less are FDIC insured.

Silicon Valley Bank employees were offered 45 days of employment at one and a half times their salary by Federal Deposit Insurance Corp, the US regulator that took control of the failed lender, according to an email to staff seen by Reuters.

The FDIC will sign up workers and give them information about benefits over the weekend, and former parent company SVB Financial Group will provide details of health care, the FDIC wrote in an email titled “Employee Retention” last week. Friday time. SVB had a workforce of 8,528 at the end of last year.

Staff have been told to continue working remotely, with the exception of essential workers and branch employees.