Signage outside Silicon Valley Bank headquarters in Santa Clara, California, US, on Thursday, March 9, 2023.
David Paul Morris | Bloomberg | Getty Images
Silicon Valley Bank has been closed by regulators, which have taken control of the bank’s deposits, the Federal Deposit Insurance Corp. announced Friday.
The California Department of Financial Protection and Innovation closed SVB, and named the FDIC as the receiver. The FDIC in turn has created the Deposit Insurance National Bank of Santa Clara, which now holds the insured deposits from SVB.
The FDIC said in the announcement that insured depositors will have access to their deposits no later than Monday morning. SVB’s branch offices will also reopen at that time, under the control of the regulator.
The FDIC also said SVB’s official checks will continue to clear.
The FDIC’s standard insurance covers up to $250,000 per depositor, per bank. It is unclear exactly how larger accounts or credit lines for companies will be impacted by the closure. The FDIC said it will pay uninsured depositors an advanced dividend within the next week.
As of the end of December, SVB had roughly $209 billion in total assets and $175.4 billion in total deposits, according to the press release. The FDIC it was unclear how much of those deposits were above the insurance limit.
SVB was a major bank for venture-backed companies, which were already under pressure due to higher interest rates and slowdown for initial public offerings.
The closure of SVB would impact not only the deposits, but also credit facilities and other forms of financing. The FDIC said loan customers of SVB should continue to make their payments as normal.
The move represents a rapid downfall for SVB. On Wednesday, the bank announced that it was looking to raise more than $2 billion in additional capital after suffering a $1.8 billion loss on asset sales.
The shares of parent company SVB Financial Group fell 60% on Thursday, and dropped another 60% in premarket trading on Friday before being halted.
CNBC’s David Faber reported Friday morning that the efforts to raise capital had failed and that SVB had pivoted toward a potential sale. However, a rapid outflow of deposits was complicating the sales process.
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