The CEO of Silicon Valley Bank sold 2.27 million shares of the entity days before the bankruptcy

Greg Becker SVB

The CEO of Silicon Valley Bank (SVB), Greg Becker, sold shares of the bank worth 2.27 million dollars (about 2.11 million euros) on February 27, according to the Commission’s files. of the Securities and Exchange of the United States (the SEC, for its acronym in English). The operation, therefore, took place less than two weeks before the fall of the entity.

As reported by the MarketWatch portal, the transfer was part of a prearranged plan to sell shares for executives, known as the 10b5-1 program, which Becker filed with the SEC on January 26, just six weeks before the bank went under.

The CEO of SVB also sold shares of the bank on January 31 for another 1.1 million dollars, an operation that, according to the US CNMV, he used to settle a tax debt.

In the case of the sale on February 27, the CEO of the SVB exercised stock options (known as stock options ) -that is, he exchanged his options for shares of the entity- to later sell the titles.

The sale was settled in a price range that ranged from $285 per share to $302 per share. Last Friday night, after the collapse of the entity, they were no longer worth anything.

Becker’s recent stock gains add to the $2.6 million in cash he collected last year, which included a $1.5 million bonus.

Silicon Valley Bank announced last Wednesday that it was going to seek a capital increase to try to deal with its financial difficulties, which had led it to dump investments worth about $21 billion, at a loss of about $1.8 billion.

Withdrawal of funds

That announcement led many clients to withdraw their funds, after which regulators had to close the bank on Friday for lack of liquidity, and the company’s stock price subsequently plunged, which in turn affected the banking sector in general. both in the United States and in other countries.

“Market participants were surprised that a large US bank could find itself in such a situation due to an outdated and elementary maturity mismatch,” underlined by the Swiss private bank Julius Baer.

“In fact, there was no hole in the SVB’s balance sheet due to credit losses in its asset portfolio, but only the mechanical impact of higher interest rates on a very high-quality bond portfolio,” they add. The bank withdrawal was triggered by solvency fears, but in reality, the entity was affected by a liquidity problem and not a solvency one.

In this sense, “the decision of the US authorities to support all the deposits of SVB -and of Signature Bank, which has a balance of 110,000 million dollars- does not put taxpayers’ money at serious risk. the assets on SVB’s balance sheet expire in an orderly manner over time and that the bank is liquidated”, they also indicate from the private bank.

In any case, the SVB was the second-largest bank failure in US history, after the 2008 collapse of Washington Mutual.