Silicon Valley Bank paid out annual bonuses to US employees just hours before seizure: Report

The Silicon Valley Bank (SVB) paid out annual bonuses to eligible American employees on Friday (March 10), just hours before the bank was seized by the Joe Biden administration. According to a report by the Axios on Saturday, the bonuses were for the work done last year and were previously scheduled to be disbursed on Friday. However, the day coincided with the bank's takeover by the Federal Deposit Insurance Corporation (FDIC).

Bonusesfor employees in some other countries were scheduled for later in the month, and haven't been paid.

The Axios report said that an unknown number of SVB employees were emailed by the FDIC on Friday, offering them employment with the remnant organisation for the next 45 days. These employees would be compensated 1.5 times their normal salaries. On the other hand, hourly workers would receive 2 times their normal wages for overtime.

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Speaking to the news website, a spokesperson from the insurance corporation said, "Without commenting on salaries, it’s our standard practice to ask retain [sic] bank employees to assist with an orderly transition as part of our resolution process."

On Friday, American authorities swooped in and seized the assets of the SVB, which had been a key lender to US startups since the 1980s, after a run on deposits made it no longer tenable for the bank to stay afloat on its own.

Given the bank's sudden collapse, US Treasury Secretary Janet Yellen convened an emergency meeting of the country's top banking regulators. Yellen expressed full confidence in banking regulators to take appropriate actions in response and noted that the banking system remained resilient and regulators have effective tools to address this type of event, a statement from the Treasury department said.

The collapse of the bank has left markets jittery over a potential sign of widespread turmoil. However, analysts only see a limited risk of financial contagion.

CFRA Research's Ken Leon said that the SVB's woes were the result of "idiosyncratic stresses and not one that we see as systemic that would affect the banking industry." Leon said that stricter US regulations enacted after the 2008 financial crisis have helped contain trouble, the news agency AFP reported on Saturday.

Analysts at Morgan Stanley, meanwhile said, "We want to be very clear here...we do not believe there is a liquidity crunch facing the banking industry, and most banks in our coverage have ample access to liquidity."

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