On Friday, March 10, US regulators pulled the plug on Silicon Valley Bank (SVB), the 16th largest bank in the United States, with $209 billion in assets and approximately $175.4 billion in deposits. The bank had specialized in financing start-ups, but its demise was triggered by customer withdrawals that led the company to liquidate securities positions whose values had plummeted due to the Federal Reserve’s interest rate hikes.
The collapse of SVB has left markets rattled, as it represents not only the largest bank failure since Washington Mutual in 2008, but also the second largest failure ever for a retail bank in the United States.
In response to the news, Min-Liang Tan, co-founder and CEO of Razer, tweeted that Twitter should buy SVB and become a digital bank. Elon Musk, who last year acquired Twitter in a $44 billion deal, responded by saying that he was open to the idea.
This has raised speculation that Musk’s tweet may have been in earnest, especially given his earlier interest in creating a payments platform on Twitter as the first step towards making it an “everything app.”
While little known to the general public, SVB had been a key player in financing start-ups, and its collapse has sent shockwaves through the tech community. Musk’s idea of turning it into a digital bank may have merit, as the move could help to fill the gap left by SVB’s demise and provide funding for start-ups in the future. However, it remains to be seen whether Musk will pursue this idea further or if it was just a passing thought.