Over 10 Hong Kong-listed firms say their deposits at SVB are immaterial

Over 10 Hong Kong-listed companies have declared that the shutdown of Silicon Valley Bank (SVB) has no material adverse effect on them as their deposits at the bank are immaterial. These companies include Brii Biosciences(騰盛博藥), CANbridge Pharmaceuticals(北海康成製藥), Everest Medicines(雲頂新耀), Genor BioPharma(嘉和生物藥業), Jacobio Pharmaceuticals(加科思藥業), New Horizon Health(諾輝健康), Sirnaomics(聖諾醫藥), CStone Pharmaceuticals(基石藥業), Broncus Medical(堃博醫療), BeiGene (百濟神州) and Mobvista(匯量科技), of which most of them are Chinese pharmaceutical firms.

This came as the SVB was closed on 10 March by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. According to the FDIC, all insured depositors of SVB will have full access to their insured deposits no later than the morning of 13 March. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of SVB, future dividend payments may be made to uninsured depositors.

According to an official announcement on the Hong Kong Stock Exchange, Brii Biosciences said the company and its subsidiaries held less than 9% of its total cash and bank balances (including cash, cash equivalents and time deposits with original maturity of up to 12 months with multi-tenor rates and flexibility for early uplift) at SVB as of 28 February. The other cash and bank balances are distributed across multiple large financial institutions.

"The company believes that, notwithstanding the closure of SVB, the existing cash and bank balances of the company continue to be sufficient to meet its working capital, capital expenditures and material cash requirements from known contractual obligations for the next three years, and does not expect the above incident to have a material adverse impact on the company’s business operations, vendors, employees, collaborators or customers," said the statement. 

Another official statement of Genor BioPharma said that the company maintains operating accounts at SVB with a minimal cash balance that is within the FDIC-insured limits. "The aforesaid cash balance represents less than 0.01% of the company’s total cash, cash equivalents and term deposit. In addition, the company’s cash and assets are well diversified to minimise risk, and the company’s cash deposits in banks are diversified and the company has a sound fund management mechanism," the statement read. Therefore, it said the SVB incident has no material adverse effect on the group, and the business operation and financial condition of the group remain normal.

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Meanwhile, Broncus Medical also said it is holding about US$11.8 million at SVB, representing around 6.5% of its total cash. It added that the company has no SVB-related risk exposure. Another firm BeiGene said its uninsured cash deposits with SVB represent approximately 3.9% of its most recently reported total cash, cash equivalents, restricted funds and short-term investments of $4.5 billion, whereas Mobvista said it has deposit accounts with SVB with an aggregate balance of approximately US$430,000, which represents a minimal portion of the cash and cash equivalents of the group.

On the other hand, a Shenzhen-listed medical firm the company's cash and financial assets are diversified to minimise risks. As of 10 March, the deposit amount of the company and its subsidiaries at SVB, accounted for 5% of the company's total cash and financial assets. In addition to its deposits at SVB, the company's remaining cash and assets are deposited at systemically important financial institutions such as Morgan Stanley, ICBC, JPMorgan Chase, UBS, and Goldman Sachs. These assets are currently safely stored.

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