According to the FDIC, as a receiver, it promptly transferred all Silicon Valley Bank-insured deposits to the recently established Deposit Insurance National Bank of Santa Clara (DINB).
On March 10, California’s financial watchdog closed Silicon Valley Bank, a significant financial institution for venture-backed businesses, making it the first bank insured by the Federal Deposit Insurance Corporation to fail in 2023.
Silicon Valley Bank received a shutdown order, although the California Department of Financial Protection and Innovation did not provide a justification for the decision. To safeguard insured savings, the California regulator named the FDIC as a receiver.
Depositors “will have complete access to their insured deposits no later than Monday morning, March 13, 2023,” according to the official announcement. The regulator noted that once the FDIC sells all of Silicon Valley Bank’s assets, uninsured depositors will be issued a “receivership certificate for the remaining amount of their uninsured funds” and be eligible for future dividend payments.
SVB, another name for Silicon Valley Bank, ran 17 branches across Massachusetts and California. On March 13, all branches and the main office will be accessible to depositors.
SVB is one of the top 20 banks in terms of assets in the United States. Some venture capital firms with a focus on cryptocurrencies, like Andreessen Horowitz and Sequoia, acquired financial services from the bank.
Less than 48 hours after management announced they needed to raise $2.25 billion in stock to support operations, the bank’s downfall came quickly. In its mid-quarter financial update, SVB disclosed the sale of $21 billion in securities at a $1.8 billion loss, along with the announcement.
On March 9, trading in SVB stock was suspended because of the company’s high volatility. According to The Wall Street Journal, the stock’s 60% fall was the biggest single-day wipeout in history.