Visa, Mastercard depict bank failure impact
Visa and Mastercard payments through Silicon Valley Bank and Signature Bank proceeded through the weekend without hiccups despite those banks’ takeover by regulators in recent days.
Signature Bank was shuttered by New York regulators last week and federal regulators took over Silicon Valley Bank on Friday after a surge in depositors withdrawing their funds. Other regional and mid-sized banks, such as First Republic Bank, have experienced significant declines in their stock prices due to investor worries that they too could experience a flight of depositors.
The card network companies were essentially unfazed by the situations unfolding at the banks though they were closely monitoring the events, top executives for Visa and Mastercard told investors at a conference this week.
“Things have been completely normal,” Visa Chief Financial Officer Vasant Prabhu said at the Wolfe Resarch conference Wednesday. “Debit and credit credentials have been usable, without any disruptions whatsoever. They’re settling every night. So, really, no impact whatsoever.”
When pressed by Wolfe analyst Darrin Peller to describe what the situation looked like over the weekend, when the bank industry turmoil spooled up, Prabhu reiterated his description. “There’s been absolutely no friction whatsoever,” the outgoing Visa CFO said on Wednesday.
An executive for Visa’s smaller rival Mastercard, which has acted as a network for card issuer SVB, described the situation in a similar fashion.
“Our current products continue to operate normally,” Mastercard Chief Product Officer Craig Vosburg said at the Wolfe conference on Tuesday. He gave a plug to regulators too, for how they handled the bank failures.
“We were encouraged by the actions taken by the regulators over the weekend,” Vosburg said. “We’re in close contact with the relevant regulators and received assurances from the FDIC that the current operations at SVB and Signature would continue to operate on a business-as-usual basis and, with that, our settlements with both banks have continued as per normal.”
Peller noted that both companies provide a back-stop to banks putting through transaction payments if there are shortcomings elsewhere in processing. The executives agreed that’s the case.