Chinese companies rush to appease investors after SVB collapse

The collapse of Silicon Valley Bank (SVB) caused widespread concern in China, where a slew of founders and companies rushed to appease investors by saying their exposure was negligible or non-existent.

SVB, which worked with nearly half of all venture-backed tech and healthcare companies in the United States before being taken over by the government, has a Chinese joint venture, created in 2012 and aimed at the country’s tech elite.

SPD Silicon Valley Bank, owned 50-50 by SVB and local partner Shanghai Pudong Development Bank, said Saturday that its operations were “solid”.

“The bank has a standardized corporate governance structure and an independent balance sheet,” it said in a statement.

“As China’s premier technology bank, SPD Silicon Valley Bank is committed to serving Chinese science and technology companies and has always had sound operations in line with Chinese laws and regulations.”

It is unclear what will happen to SVB’s ownership in the joint venture.

SVB Financial Group, SVB’s parent company, also owns two business consulting companies and a financial services company in mainland China, according to corporate database Tianyancha.

Concerns over the SVB bankruptcy have spread around the world as investors worry about the broader risks to the global banking sector and any potential spillover effects.

In an extraordinary move to restore confidence in the American banking system, the Biden administration guaranteed on Sunday (12) that customers of SVB and Signature Bank, which was closed by regulators, will have access to all of their money.

That action appears to have appeased global markets, with US stocks rising in response and some Asian markets paring earlier losses.

non-significant exposure

In China, at least a dozen companies have issued statements since the SVB collapsed trying to pacify investors or customers, saying their creditor exposure was limited. Most were biotechnology companies.

BeiGene, one of China’s largest cancer pharmaceutical companies, said on Monday that it had more than $175 million in uninsured cash deposits at SVB, which represents approximately 3.9% of its cash, cash equivalents and short-term investments.

“The company does not expect recent developments with SVB to have a significant impact on its operations,” he said.

Zai Lab, a pharmaceutical company, announced that its cash deposits at SVB were “irrelevant” at around $23 million.

The closure of the SVB “will have no impact” on the company’s ability to meet its operating expenses and capital spending requirements, including payroll, it said.

Other companies that have publicly guaranteed investors include Andon Health, Sirnaomics, Everest Medicines, Broncus Medical, Jacobio Pharmaceuticals, Brii Biosciences, CStone Pharmaceuticals, Genor Biopharma and CANbridge Pharmaceuticals.

Mobile ad tech firm Mobvista and wealth management firm Noah Holdings said their cash holdings in SVB were “minimal” or “immaterial”.

Popular selfie app Meitu said it has not had any SVB bank accounts since 2020. It has issued a statement “to avoid any potential public misunderstanding”.

Ascletis Pharma, MicroPort NeuroTech, Antengene Corp and Suzhou Basecare Medical Corporation also denied that they had any filings or dealings with SVB.

Pan Shiyi, co-founder and former chairman of Soho China, a major Beijing-based real estate developer, denied he had any money in SVB after reports went viral on social media that he had lost billions of yuan.

“We never opened a Silicon Valley Bank account or made a deposit,” he said late Sunday on his Weibo account.