National Bank of Canada is to acquire the commercial loan portfolio of Silicon Valley Bank’s Canadian branch.
Under the terms of the agreement, the bank will acquire a portfolio in the technology, life science and global fund banking sectors. The deal further diversifies its commercial loan portfolio across Canada.
The portfolio comprises approximately C$1bn in loan commitments of which around C$325m are outstanding. The assets will be integrated into National Bank’s Technology and Innovation Banking Group.
National Bank offers full-service banking and tailored advice on venture-lending products, growth and M&A financing, treasury and foreign exchange management, investment banking advisory and private management services, as well as direct investments in fintechs via its corporate venture capital arm.
“With this acquisition and following years of high growth by the Technology and Innovation Banking Group, the Bank strengthens its presence in the tech industry across Canada,” said Michael Denham, Executive Vice-President, Commercial and Private Banking at National Bank.
“As the bank keeps expanding, we are thrilled to support Canadian innovation in sectors that offer solutions to the many challenges our society is facing. We are upbeat about the future of technology-based companies and this acquisition demonstrates this.”
Closing is expected in the coming weeks and is subject to regulatory approval.
A classic bank run: the collapse of Silicon Valley Bank
The collapse of Silicon Valley Bank in March triggered the most significant banking crisis in the US since 2008. As of 10 March 2023, Silicon Valley Bridge Bank had nearly $167bn in assets and $119bn in deposits.
Silicon Valley Bank had benefited from the era of near zero interest rates. Billions of dollars of deposits were saved with the bank via tech venture capital. The bank placed deposits into long-term US Treasury bonds. When interest rates rose sharply, the bank was forced into rushed sales of the bonds at a loss, as depositors demanded higher returns.
As the bank suffered an outflow of deposits, tech investors were spooked, with the loss of investor confidence fuelled by social media coverage, resulting in a old fashioned bank run.