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The Sudden Implosion of Silicon Valley Bank
Allayannis, George (Yiorgos); Sesia, Aldo Case F-2061 / Published October 31, 2023 / 31 pages.
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Product Overview

On March 10, 2023, Silicon Valley Bank (SVB) went into receivership. At the time, it was the second-largest US bank failure in history. What happened? The case briefly describes the story of SVB, from its origin in the early 1980s to March 2023, and focuses on the events surrounding its demise. The case discusses in detail the issues that led to SVB’s bankruptcy, in particular interest-rate risk, asset-liability management (ALM), inadequate stress testing, risk management more broadly, corporate governance, regulation, issues related to the bank’s focus on venture capital (VC) and private equity (PE) loans, and its exposure to the technology sector. The case also describes the Fed’s reaction after the bankruptcy. The SVB episode offers an important learning opportunity that touches many facets of a bank and its environment. It has several clear messages about bank management leadership. The case is well suited for a course on financial institutions, money and banking, and risk management. Ideally it would be positioned after credit, interest-rate, and liquidity risks have been covered, so that students have a better understanding of these concepts before they tackle this case; it could also be used as an introduction to the banking model, its key risks, and the role of the Federal Reserve. At Darden, it is taught in the second-year elective, "Financial Institutions and Markets."



Learning Objectives

The key objectives of the case are as follows: (1) understanding what went wrong with SVB, (2) exploring risk management (interest-rate and liquidity) issues faced by SVB, (3) examining asset-liability management themes present at SVB, (4) discussing corporate governance issues at a bank, (5) discussing SVB’s focus on tech and its implications, and (6) contemplating new risks arising from social media.


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  • Overview

    On March 10, 2023, Silicon Valley Bank (SVB) went into receivership. At the time, it was the second-largest US bank failure in history. What happened? The case briefly describes the story of SVB, from its origin in the early 1980s to March 2023, and focuses on the events surrounding its demise. The case discusses in detail the issues that led to SVB’s bankruptcy, in particular interest-rate risk, asset-liability management (ALM), inadequate stress testing, risk management more broadly, corporate governance, regulation, issues related to the bank’s focus on venture capital (VC) and private equity (PE) loans, and its exposure to the technology sector. The case also describes the Fed’s reaction after the bankruptcy. The SVB episode offers an important learning opportunity that touches many facets of a bank and its environment. It has several clear messages about bank management leadership. The case is well suited for a course on financial institutions, money and banking, and risk management. Ideally it would be positioned after credit, interest-rate, and liquidity risks have been covered, so that students have a better understanding of these concepts before they tackle this case; it could also be used as an introduction to the banking model, its key risks, and the role of the Federal Reserve. At Darden, it is taught in the second-year elective, "Financial Institutions and Markets."

  • Learning Objectives

    Learning Objectives

    The key objectives of the case are as follows: (1) understanding what went wrong with SVB, (2) exploring risk management (interest-rate and liquidity) issues faced by SVB, (3) examining asset-liability management themes present at SVB, (4) discussing corporate governance issues at a bank, (5) discussing SVB’s focus on tech and its implications, and (6) contemplating new risks arising from social media.