Silicon Valley Bank Closed By State Regulator, FDIC Receiver
State regulators closed Silicon Valley Bank.
The California Department of Financial Protection and Innovation (DFPI) said Friday (March 10) that it had taken over the bank and named the FDIC as its receiver.
The state regulator noted Silicon Valley Bank’s “inadequate liquidity and solvency” in the press statement.
“Silicon Valley Bank is a state-chartered commercial bank and member of the Federal Reserve System based in Santa Clara, with total assets of approximately $209 billion and total deposits of approximately $175.4 billion as of Dec. 31, 2022,” the DFPI said in the release. “Its deposits are federally insured by the FDIC subject to applicable limits.”
The FDIC founded the Deposit Insurance National Bank of Santa Clara (DINB) to protect insured depositors after Silicon Valley Bank closed on Friday.
“All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023,” the FDIC said in the release. “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 Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”
According to the FDIC news release, the bank’s main office and all branches will reopen on Monday (March 13), the DINB will maintain Silicon Valley Bank’s business hours, and online banking and other services will resume on Monday.
The announcement also stated that FDIC will retain the bank’s assets for subsequent sale. Loan customers should pay and account holders over $250,000 should call the FDIC.
These steps came after Silicon Valley Bank’s parent firm, SVB Financial Group, ceased trading after a 68% premarket drop and announced that it will sell rather than raise funds.
After SVB’s $1.8 billion after-tax loss on the sale of its investments raised investor concerns about its liquidity, customer withdrawals and stock prices plummeted.
According to the FDIC press release, Silicon Valley Bank is the first FDIC-insured institution to collapse since Almena State Bank in Kansas failed in October 2020.
