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The real reason Silicon Valley Bank failed: working from home?

Since the advent of the 'new normal', banks have been pretty steadfast in their approach to working from home. They want their employees centralised and in the office. Looking at what's happened with Silicon Valley Bank (SVB) this past week, they might feel vindicated.

The de-facto bank of the tech sector, SVB - like many of the tech companies it worked with - was very open to remote work in the US, with work from home available "most of the time". It had a plethora of experienced banking talent located a great distance apart from each other.

Take risk, for example. Former Morgan Stanley executive director Doug Carter worked remotely, based out of Parisppany, NJ, as the director of business risk. Director of financial risk management Josiah Snelgrove was based in Raleigh, NC, 150 miles from the Charlotte office. 

Recent hires like senior payments strategist Akua Pokua-Nuako, who joined from the fintech Toast in January, were recruited for remote positions. 

In New York, senior officials seem split between remote and hybrid. Head of model risk management Nav Vaidhyanathan worked purely remotely while managing director Thomas Borruso, who spent eight years at JPMorgan, worked for SVB on a hybrid basis.

The situation seems to have been somewhat different at SVB's investment banking subsidiary, SVB Securities. There, it seems staff were expected in the office a lot more frequently. 

Needless to say, WFH wasn't the only issue at SVB. The real problem stemmed from the fact that the bank had no duration hedges on its bond investments and that a new financial team decided to start investing in long duration bonds circa 2017, without any real risk management measures. Work from home may have contributed to communications breakdowns, but a bigger issue is likely to have been the absence of a chief risk officer from April 2022 to January 2023. Kim Olsen joined SVB from Sumitomo in this role in January 2023. She appears to have been based in the New York office. 

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AUTHORAlex McMurray Editor
  • ea
    ealdwairi
    18 March 2023

    The biggest threat to humanity is ignorance!! Such as this article

  • ph
    photobug56
    16 March 2023

    Wfh didn't cause this. Poor choices, poor risk management and regulators not paying attention did.

  • Sa
    Sara
    13 March 2023

    Agree, Never been advocate of a complete WFH. WFH works only if you are extremely experienced and dont need osmosis learning. Young ones, no matter how much they think they are smart, dont have application of the theories/academic knowledge in practice, that comes with experience in the office. I get things done when everyone is in the office, as I can just walk to and explain the issues while by email/conference calls/ chats is not the same. Some people are not even available online, assuming that it does not matter what time they log in or log out as long as they personally productive, not entirely true. Some people might be dependent of them and cant hold of them.

  • Br
    Bruce Dwayne
    13 March 2023

    Sure thing mate...

  • [Deleted]
    13 March 2023

    [Deleted]

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