These ASX tech shares have exposure to the Silicon Valley Bank collapse

The second-largest banking collapse in US history occurred last week.

Key points
  • A number of tech shares have been caught up in the collapse of Silicon Valley Bank 
  • The bank's strong presence in the tech sector means many have cash deposits with the failed bank
  • This morning, companies have been revealing the extent of their exposure

On Friday, the United States' 16th largest bank, Silicon Valley Bank (SVB), collapsed following a bank run.

Given that SVB had a big presence in the tech sector, a large number of ASX tech shares were customers and had funds in its bank accounts.

With the bank now falling into insolvency, it is unclear what will happen to these funds and what ramifications it will have on their operations and access to capital.

Though, the good news is that no ASX tech shares appear to have put all their eggs in one basket, underlying the importance of diversification and limiting their exposure to this collapse.

Here's a summary of tech shares with SVB exposure:

A worried man holds his head in his hands

Image source: Getty Images

Bigtincan Holdings Ltd (ASX: BTH)

This sales enablement platform provider revealed that it has no material exposure to SVB.

Life360 Inc (ASX: 360)

This location technology company is a little more complex than others but estimates that its exposure is US$5.6 million. However, Life360 acknowledges that it also has US$75.4 million in shares of money market mutual funds invested in short-term, AAA-rated U.S. Government Treasury and Government Agency securities that are in SVB custodian accounts. It believes that these accounts were not co-mingled with SVB's assets.

Nitro Software Ltd (ASX: NTO)

This document productivity software company has US$12.2 million of its cash reserves held on deposit at SVB. This compares to its cash balance of US$28 million at the end of December. Positively, though, the company revealed that this development has not impacted its takeover approach from Potentia.

Redbubble Ltd (ASX: RBL)

This struggling ecommerce company estimates that its cash exposure to the SVB collapse is $1.3 million. However, it had a first-half closing cash balance of $97 million, so this is immaterial.

Sezzle Inc (ASX: SZL)

This buy now pay later provider had limited exposure to SVB. Just US$1.2 million of its US$68 million was held at the collapsed bank.

Siteminder Ltd (ASX: SDR)

This travel technology joined in on the bank run on Friday and "had success in transferring some of its cash holdings to other banking partners." However, cash holdings of up to A$10 million were not able to be transferred. The company also revealed that it has an undrawn US$20 million revolving credit facility with SVB. Nevertheless, it currently has A$58 million in cash outside SVB to fund its operations.

Xero Limited (ASX: XRO)

This cloud accounting platform provider revealed that its total exposure to SVB is approximately US$5 million. This represents less than 1% of its most recent cash and cash equivalents balance.

Latest development

In the last few minutes, the US government has announced that it will be stepping in.

According to CNBC, depositors at both SVB and Signature Bank in New York, which has also just closed, will have full access to their deposits on Monday.

A joint statement from Fed Chair Jerome Powell, Treasury Secretary Janet Yellen, and FDIC Chair Martin Gruenberg, said:

Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.

After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.

This news has given Wall Street a major lift and sent US futures hurtling higher.

Motley Fool contributor James Mickleboro has positions in Life360 and Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bigtincan, Life360, Redbubble, SiteMinder, and Xero. The Motley Fool Australia has positions in and has recommended Bigtincan and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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