« SVB was really the tech bank” recalls Laurence Ruiz, co-founder and partner of the accounting firm Orbiss, based in New York and specialized in supporting companies setting up in the United States. “To be a client, you had to belong to the tech world and preferably have raised funds. They offered all the products a startup needed, with teams specializing in their issues”.
Perfect banks for foreign startups
This was also the case for Signature Bank, a smaller New York bank, but just as close to entrepreneurs. This bank, also very involved in the world of cryptocurrencies, went bankrupt in the wake of SVB, before being bought a few days later by Flagstar Bank. “The bankruptcy of Signature Bank impacted us even more than that of SVB: we knew the team very well, it was the only bank that answered us in 5 minutes” adds Laurence Ruiz, who estimates that about fifty customers of the firm had accounts in either of these two banks.
His partner, Yoann Brugière adds: “in addition, these banks were much more open than the others to working with foreign customers”. A welcome specificity, while the major national banks, such as Chase or Bank Of America, are very cautious about welcoming non-American customers. ” Five years ago, no one could work with Chase anymore, they closed our clients’ accounts, because it was too complex for them to manage. And during the covid, Chase and Bank of America considered that foreign companies established in the United States were not entitled to government aid.“, explains Laurence Ruiz.
This is enough to encourage entrepreneurs even more to turn to regional banks, which are more agile and innovative, such as SVB or Signature. ” In France, when we say “regional bank”, it may seem small. But in the United States, it’s a whole different scale: SVB was in the national Top 20, for example“, specifies Yoann Brugière.
The fear of turning back
Today, thanks to the action of the American public authorities which guaranteed deposits well beyond the regulatory limit of $250,000, everything is back to normal. “No customer has lost a single penny”, emphasizes Laurence Ruiz, who explains that her clients very quickly regained access to their accounts and were able to issue transfers again in time to pay their bills and the salaries of their employees.
But in the long term, the end of these pro-entrepreneur banks, and especially the risk of a predictable regulatory tightening, will complicate the task of European startups who want to set up in the United States. ” These were extremely modern banks, with innovative tools, connections via API, links with fintechs… There, we are going to backtrack and have to go to banks that remain very traditional, without these modern tools.,” regrets Yoann Brugière.
In France, neo-banks are reassuring
And in France ? Through their innovative nature and their approach pro-entrepreneurs » two banks could be compared to SVB and Signature Bank: Qonto and MemoBank. But the comparison stops there. Both were also quick to reassure their customers of their solidity.
MemoBank indicates in particular that its liquidity ratios are very much higher than the regulatory minimums, while its deposits placed with the Banque de France represent 62% of its entire balance sheet, whereas SVB had only placed 3.7% with the US central bank before its bankruptcy, i.e. 16 times less.
Qonto, pour in part, highlights the segregation of part of its clients’ funds with Crédit Mutuel Arkéa and Natixis, as well as financial guarantees by Crédit Agricole CIB for another part of the funds. “In the event of Qonto’s bankruptcy, 100% of your funds would be returned to you by our partner banks under the supervision of the ACPR” it is specified. And in the (“unlikely”) case of a bankruptcy of Crédit Mutuel Arkéa or Natixis, “the funds are guaranteed by the Deposit Guarantee and Resolution Fund up to €100,000 per customer and per institution”. That is up to €200,000 per customer if both partners were to default simultaneously.
No quick fix
“In any case, there are no miracle solutions: we must multiply the possibilities and continue to work with innovative banks, but by opening at least two bank accounts, to have maximum coverage.,” explains Laurence Ruiz.
This advice prevails on both sides of the Atlantic: from the start, we have advised our clients to rely on several banking partners at the same time, and never to put all their eggs in one basket. If all of your deposits are concentrated within a single banking institution, we therefore advise you to distribute them between different banks recommends Jean-Daniel Guyot, the founder of MemoBank.