The embattled Silicon Valley Bank (SVB) has officially been closed down by the California Department of Financial Protection and Innovation, making for the second-largest bank failure in U.S. history.
The Federal Deposit Insurance Corporation (FDIC) has been appointed as its receiver and will ensure all insured depositors gain full access to their funds by Monday, March 13.
- Per a press release from the FDIC on Friday, the FDIC has simultaneously created the Deposit Insurance National Bank of Santa Clara (DINB) to protect SVB’s depositors, to which all insured deposits from the collapsed bank have been transferred.
- Under the FDIC, insured deposits include account holdings of under $250,000.
- Meanwhile, uninsured depositors will be granted a “receivership certificate” for their remaining uninsured deposits. The FDIC said future dividend payments “may be made to uninsured depositors,” as the agency sells off SVB’s assets.
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“As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits,” stated the FDIC.
- The agency said that it still needs additional information to determine exactly how much the bank’s total deposits exceed insurance limits.
- SVB is the largest bank to fail since the Great Recession in 2008, when Washington Mutual Bank fell apart with $307 billion in assets, and was later acquired by JP Morgan.
- Panic surrounding SVB began to spread on Wednesday after the bank announced an intended $2.25 billion raise and a $21 billion bond portfolio sale to restructure its balance sheet. The latter sale made the firm realize a loss $1.8 billion.
- The following day, Paypal co-founder Peter Thiel urged companies to withdraw from SVB, while the bank’s CEO told clients to “stay calm”.
- SVB’s attempted raise ultimately failed, and certain firms began examining the bank with possible hopes of acquiring it, according to CNBC.
- The bank’s failure may be a partial reason for Bitcoin’s slide over the past two days to under $20,000.
Feature Image Courtesy of Bloomberg.