The full picture of why Silicon Valley Bank failed so spectacularly and so fast has not yet come into focus. But uncommon lending practices at the cutting-edge lender contributed to its woes and raise questions about risk management by its executives and board, analysts said. These lending practices may also explain why there has been no merger of the institution with a healthier bank as typically occurs when the Federal Deposit Insurance Corp. steps in as it did with Silicon Valley Bank last week.
For example, of the roughly $74 billion in total loans Silicon Valley Bank held on its books at year-end, almost half — $34 billion — went to borrowers who used the money to buy or carry securities of their own, regulatory data shows. Other lenders make such loans but in far smaller amounts, filings show.