Rocket Lab says it has US$38m with failed Silicon Valley Bank

One of Rocket Lab's electron rockets lifts off from Mahia Peninsula.

US-listed New Zealand space company Rocket Lab says it has about US$38 million ($62 million) or 7.9 per cent of its cash with the failed Silicon Valley Bank (SVB).

The collapse of SVB has sent shockwaves around the world, forcing tech investors and start-ups to check on their financial exposure at a time when many businesses are already having to lay off staff.

Several of the world’s biggest banks saw their share prices fall last week after SVB, a technology-focused lender, revealed a US$1.8 billion ($2.9b) loss on the sale of a portfolio of securities, sending its shares into freefall. US bank regulators took over the bank on Friday.

Rocket Lab USA said in a filing with the US Securities and Exchange Commission that it was aware of media reports indicating that SVB has been closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation as receiver.

As of Friday, Rocket Lab said that it had accounts with SVB with an aggregate balance of about US$38m ($62m), which was about 7.9 per cent of the company’s total cash and cash equivalents and marketable securities as of December 31, 2022.

Rocket Lab was founded in June 2006 by Peter Beck. The company has a rocket launch pad on Māhia Peninsula.

Its shares last traded on America’s Nasdaq on Friday at US$3.91, little-changed.

An already-weak Wall Street declined for a second day in volatile trading as investors worried that SVB’s failure could be a sign of broader woes in the sector.

The S&P closed down 1.5 per cent, taking its losses for the week to 4.5 per cent, the worst week in almost six months.

The technology-based Nasdaq Composite fell by 1.8 per cent on the day, and was 4.7 per cent lower for the week.

London’s Financial Times reported that UK chancellor Jeremy Hunt was on Saturday locked in talks over how to stop the collapse of SVB from dealing a heavy blow to Britain’s tech sector.

More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB, the paper said.

International business news service Bloomberg said investors and depositors tried to pull US$42b from SVB on Thursday in one of the biggest US bank runs in more than a decade.

At the close of business on March 9, the bank had a negative cash balance of US$958 million, according to an order taking possession of the bank filed on Friday by California’s bank regulator, the Department of Financial Protection and Innovation.

The order shines a light on the scale of the bank run faced by the lender, which was placed into Federal Deposit Insurance Corp receivership by the state regulator. The scale of attempted withdrawals was so large that the bank ran out of cash and ways to get it, Bloomberg said.