FDIC takes control of Silicon Valley Bank | Forexlive
Silicon Valley Bank was closed today by the California Dept of Financial Protection and Innovation, which appointed the FDIC as receiver.
The FDIC will pay uninsired depositors an advance dividend within the next week and a receivership certificate for the remainder of uninsured funds. The FDIC said the bank had
$175.4B
in deposits in the bank.
Shares of SIVB never opened today but will presumably go to zero with bond holders taking a haircut as well.
And that is why you get your money above $250K out of a bank that’s in trouble and it’s why bank runs happen.
It’s a bad outcome from any depositors who might now find themselves in a liquidity crunch.
The good news is that this was swift but the question is whether it spreads.
Right now, shares of First Republic are holding up ok.
The KRE regional bank ETF has pared losses but there’s been some fresh selling in the past 30 minutes. Shares of JPMorgan are higher today.
Here’s the FDIC press release:
WASHINGTON – Silicon Valley Bank, Santa Clara, California, was closed today by the
California
Department
of Financial Protection and Innovation, which appointed the Federal Deposit Insurance
Corporation (FDIC)
as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National
Bank of Santa
Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the
DINB all insured
deposits of Silicon Valley Bank.
All insured depositors will have full access to their insured deposits no later than Monday
morning,
March 13, 2023. 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.
Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all
branches of
Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon
Valley Bank’s
normal business hours. Banking activities will resume no later than Monday, March 13,
including on-line
banking and other services. Silicon Valley Bank’s official checks will continue to
clear.
Under the
Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have
continued access
to their insured funds.
As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets
and about
$175.4 billion in total deposits. At the time of closing, the amount of deposits in excess
of the
insurance limits was undetermined. The amount of uninsured deposits will be determined once
the FDIC
obtains additional information from the bank and customers.
Customers with accounts in excess of $250,000 should contact the FDIC toll-free at
1-866-799-0959.
The FDIC as receiver will retain all the assets from Silicon Valley Bank for later
disposition. Loan
customers should continue to make their payments as usual.
Silicon Valley Bank is the first FDIC-insured institution to fail this year. The last
FDIC-insured
institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.