Financial regulators have closed Santa Clara, Calif.-based Silicon Valley Bank and taken control of its assets following an unsuccessful capital raise.
The $209 billion Silicon Valley Bank, which collapsed March 10, is the largest bank to fail since the Great Recession. It’s also the first FDIC-insured institution to be shut down since Kansas-based Almena State Bank in October 2020.
A major bank for the tech and venture capital industries, Silicon Valley Bank had announced on March 8 that it was looking to raise more than $2 billion in additional capital after sustaining a $1.8 billion loss on asset sales. Shares of parent company SVB Financial Group fell by 60 percent the following day, falling another 60 percent during premarket trading on March 10 before being stopped. The bank had pivoted toward a potential sale, but a rapid exodus of deposits complicated the selling process.
The FDIC was appointed as a receiver and will sell the assets of the bank. “To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara,” the FDIC said. “At the time of closing, the FDIC as receiver immediately transferred to the Department of Financial Protection and Innovation all insured deposits of Silicon Valley Bank.”
According to the agency, Deposit Insurance National Bank will maintain Silicon Valley Bank’s normal business hours starting on March 13, at which time depositors are expected to have full access to their deposits. The FDIC is expected to pay uninsured depositors an advanced dividend in the next week, with uninsured depositors receiving a receivership certificate for the remaining amount of their uninsured funds.