SEATTLE — Fallout continues across the country after Silicon Valley Bank (SVB) collapsed this past week. It’s the second largest bank failure in U.S. history, only behind Seattle-based Washington Mutual's crash back in 2008.
The SVB closure impacted businesses across Puget Sound.
“The wine industry was pretty shocked and surprised,” said Erik McLaughlin, CEO of Metis, which advises wineries in the Pacific Northwest.
“We see them as one of the very best in the industry so everybody was caught off guard by it,” McLaughlin said.
Federal regulators are now in charge of Silicon Valley Bank after its closure Friday. The bank mostly served tech workers, but also was a huge asset to the wine industry.
McLaughlin estimates 10-20% of wineries in Washington use the bank to help fund operations. He said the biggest impact right now is access to a line of credit.
“That's the available credit that's available to them to put towards things to create inventory like buying grapes, paying vineyards, packaging, supplies, bottling barrels, all of that kind of stuff,” said McLaughlin.
Metis is now helping Washington wineries navigate what options are available and said the wine industry isn’t the problem.
“The wine industry is being affected by an unusual run on an individual bank in the tech sector,” McLaughlin said.
SVB’s downturn started Wednesday after telling investors it needs billions to shore up its balance sheet, leading to panic and a run on the bank.
“It might not be as clear to everyone just how big it is that a major bank that had a lot of deposits from companies here in Seattle has failed,” said Jeff Shulman, marketing professor at UW Foster School of Business.
Shulman said the impacts could be felt across Puget Sound.
“I think the two biggest things are access to money to a lot of companies here in the region. Second, is just uncertainty, uncertainty about what does the future hold. Uncertainty makes people risk averse and buckle down and that has implications for everybody here,” Shulman said.
“We have a lot of friends at Silicon Valley Bank, this is a real situation where real people are likely going to lose their jobs or have a lot of uncertainty,” said McLaughlin.