The decision by federal regulators to cover all of Silicon Valley Bank's (SVB) deposits helped large corporations that were in no real danger, Bloomberg reported.
The sudden collapse of tech-focused SVB in March triggered the worst banking shock since the 2008 global financial crisis.
The Federal Deposit Insurance Corp's (FDIC) move to backstop all SVB deposits not only saved thousands of small tech startups, it also helped large companies such as Sequoia Capital, the world's most prominent venture-capital firm, and Kanzhun Ltd., a Beijing-based tech company that runs mobile recruiting app Boss Zhipin, Bloomberg reported Friday.
Sequoia Capital received a backstop for $1 billion and Kanzhun Ltd. was covered for more than $900 million.
Bloomberg based its report on an FDIC document that the agency said it mistakenly released unredacted in response to the news outlet's Freedom of Information Act request.
The FDIC asked Bloomberg to destroy and not share the depositor list. The agency, in a letter to Bloomberg from one of its attorneys, said it had intended to "partially" withhold some details from the document "because it included confidential commercial or financial information."
After it was announced that the feds would backstop all SVB deposits, Treasury Secretary Janet Yellen supported the move.
"American households depend on banks to finance their homes, invest in an education, and otherwise improve their standards of living," Yellen said, Bloomberg reported. "Businesses borrow from these institutions to start new companies and expand existing ones."
However, critics of the move said that making all depositors whole at the lender and Signature Bank, which failed March 12, created a moral hazard, Bloomberg reported.
Former Vice President Mike Pence said that backstopping all SVB depositors amounted to a bailout — something the Biden administration has pushed back against.
Pence slammed the government's decision to insure all deposits, partly because the move would cover Chinese companies.
Kanzhun, which had $902.9 million in deposits with SVB according to the document, was heavily backed by Chinese giant Tencent before it went public on the Nasdaq in 2021.
The document showed other large SVB customers to include:
- Altos Labs Inc., which had $680.3 million in deposits.
- Payments startup Marqeta Inc., which had $634.5 million at the bank.
- IntraFi Network, which provides deposit services to financial institutions, had $410.9 million worth of deposits at SVB.
- Crypto stablecoin company Circle Internet Financial Ltd., SVB's biggest depositor with a balance of $3.3 billion.
- Streaming set-top box maker Roku Inc., which had $420 million at the bank.
- Fintech company Bill.com, which the document showed had $761.1 million at SVB.
- Silicon Valley Bank and parent SVB Financial Group Inc. were also listed as having a combined $4.6 billion in deposits.