National Bank acquires the commercial loan portfolio of the Canadian branch of Silicon Valley Bank.
The portfolio in question is made up of approximately C$1 billion in loan commitments. However, only $325 million in loans have been disbursed to Silicon Valley Bank’s corporate clients in the country.
The price paid by National Bank to complete the transaction was not disclosed.
The firm PriceWaterCoopers was responsible for leading the process of liquidating the assets of Silicon Valley Bank in the country.
“We are very pleased with the price paid and very confident that these assets will represent a source of value for our shareholders and employees,” commented Michael Denham, Senior Executive Vice-President, Corporates and Private Wealth at National Bank, in an interview.
The Silicon Valley Bank is one of the American institutions that shook up the financial sector this winter. This California bank went bankrupt when customers rushed to withdraw their money fearing for the organization’s solvency.
In Canada, the Ontario Superior Court of Justice oversees proceedings under the Winding-up and Restructuring Act.
The Silicon Valley Bank presented itself as the bank for tech entrepreneurs and its value had exploded during the pandemic.
Unlike its operations in the United States, Silicon Valley Bank did not accept commercial or personal deposits in Canada.
A presence in Montreal had been established in 2021. Silicon Valley Bank provided entrepreneurs with financing opportunities in the form of loans to support the growth of their start-up business.
Michael Denham points out that the majority of Silicon Valley Bank loans in Canada have been made to clients in Ontario and Western Canada. “The Quebec portion is the fastest growing, but it’s still a minority of loans,” he says.
He adds that the transaction will accelerate the growth of National Bank’s assets and customers in Quebec, but also in western Quebec.
Michael Denham was at the offices of Silicon Valley Bank in Toronto on Tuesday when speaking with the La Presse representative.
He says discussions will be held with the fifty-odd employees of Silicon Valley Bank in Canada to see if they can not only continue to work with current Silicon Valley Bank customers, but perhaps also fill one of the vacancies at the National Bank.
According to Michael Denham, few customers have left the Canadian branch of Silicon Valley Bank since the collapse that occurred earlier this year. “The vast majority of customers decided to stay,” he says.
The transaction allows National Bank to enhance its presence in the technology sector and diversify its business loan portfolio by acquiring assets in the technology, life sciences and global fund banking sectors.
The assets will be integrated into the Technology and Innovation group of the Montreal financial institution.
Michael Denham says he is delighted that National Bank can support Canadian innovation in sectors that offer solutions to many of the challenges facing society. He is also optimistic about the future of technology companies and argues that this acquisition is proof of that.
Founded in 1983 by a former Wells Fargo banker and a Stanford University professor, Silicon Valley Bank had its headquarters in Santa Clara, in the heart of Silicon Valley.
Shopify, Airbnb, Coinbase, Fitbit, Cisco, and Pinterest have all been tied to this bank over the years.
