Customers queue in front of First Republic Bank to withdraw their money – after the SVB bank collapsed

Dozens of customers lined up outside a First Republic Bank in Northern California on Saturday, eager to withdraw their money in the wake of Silicon Valley Bank’s collapse.

After SVB’s demise, there was fear for First Republic’s future as analysts pointed to the similarities between the estimated value of their assets and their true value.

Brentwood is located in the wine-producing community of the Golden State, just south of Napa Valley, with the area’s wineries, most notably Bloomfield, Tamayo, and Hannah Nicole, gaining international attention in recent years.

News of the collapse of the Silicon Valley Bank sent shock waves through the wine industry. It had been California’s premier financial institution for wineries for nearly three decades.

The California Department of Financial Protection and Innovation closed the bank Friday after depositors, concerned about the financial health of the lender, rushed to withdraw their deposits. The bank’s frantic two-day run dazzled observers and stunned markets, wiping out more than $100 billion in market value for US banks.

By Friday night, thousands of wineries found themselves completely locked out of their accounts with no clear timeline on when they might be able to access their funds.

First Republic issued a statement on March 10 to appease investors, noting its “ongoing security and stability and strong capital and liquidity positions.”

Founded in San Francisco in 1985, the bank has 80 branches in 11 states across the country – primarily on the West and East Coasts.

The main difference between the two banks is that Silicon Valley Bank’s debt was in securities, while First Republic’s was in loans.

Likewise, both First Republic and Silicon Valley Bank rely heavily on client deposits: in First Republic’s, wealthy individuals, and in Silicon Valley Bank’s, technology startups and venture capital investors.

With interest rates rising, First Republic’s customers have plenty of other places to park their money and try to withdraw money.

California Governor Gavin Newsom said Saturday he is in talks with the White House to “stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods and the entire innovation ecosystem that has served as a tentpole for our economy.” .

U.S. customers with less than $250,000 in the bank can count on insurance from the Federal Deposit Insurance Corp. Regulators are trying to find a buyer for the bank in hopes that customers can be cured with more than that.

Kendra Kawala, co-founder of Maker, a Bay Area canned wine company, called the news “shocking” and noted that Silicon Valley Bank was “the gold standard in the wine industry.”

When she started Maker four years ago, choosing the right banking partner was almost a cinch.

“Tech and venture are well capitalized, but this could be a serious reckoning for independent wineries,” Kawala said. ‘We’ve never experienced anything like this. Nobody knows how it will end.’

Wineries accounted for 2 percent of the bank’s total lending business, but the consequences are far-reaching, including the inability to pay employees, bills or credit card payments.

Silicon Valley Bank, the 16th largest bank in the country, had made more than $4 billion in loans to wineries and vineyards since 1994.

“This is a huge disappointment,” said winemaker Jasmine Hirsch, general manager of Hirsch Vineyards in Sonoma County, California.

Hirsch said she expects her business to work out. But she is concerned about the wider implications for smaller vintners looking for lines of credit to plant new vines.

“They really understand the wine business,” Hirsch said. “The disappearance of this bank, as one of the main lenders, will definitely affect the wine industry, especially in an environment where interest rates have risen.”

The founder of Silicon Valley Bank’s wine division, Rob McMillan, who would write the annual insights, has so far declined to comment on the situation, but he had developed the bank’s reputation as one of the few institutions serving the wine industry. really understood.

The data collected by the bank was a source of data that wineries would use to make decisions about future sales, marketing and farming.

The bank had a unique perspective on the industry due to the number of clients it helped finance.

In particular, the loss of the annual report means wineries will not have access to the extensive analysis that many used to help make their decisions.

A new bank was established Friday by the Federal Deposit Insurance Corp., the National Bank of Santa Clara, which will hold Silicon Valley Bank’s remaining deposits and assets.

But only accounts with $250,000 or less are insured by the FDIC.

Silicon Valley Bank employees were offered 45 days of work at one and a half times their salary by the Federal Deposit Insurance Corp, the US regulator that took control of the collapsed lender, according to an email to staff seen by Reuters.

Workers will be enrolled over the weekend and given information about benefits by the FDIC, and health care details will be provided by former parent company SVB Financial Group, the FDIC wrote late Friday in an email titled “Employee Retention.” SVB had 8,528 employees at the end of last year.

Staff were told to continue working remotely except for essential workers and branch employees.