Silicon Valley Bank Officially Shuts Down

Silicon Valley Bank held over $200 billion in assets, making this the second-largest bank failure in U.S. history.

The California Department of Financial Protection and Innovation has formally closed down the troubled Silicon Valley Bank (SVB), making it the second-largest bank failure in US history. The Federal Deposit Insurance Corporation (FDIC) has been appointed as receiver, and all insured depositors should have full access to their accounts by Monday, March 13.

According to a press statement issued by the FDIC on Friday, the FDIC has formed the Deposit Insurance National Bank of Santa Clara (DINB) to safeguard SVB’s depositors, and all insured deposits from the failed bank have been transferred to the DINB. Under the FDIC, insured deposits are account balances of less than $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.

“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.

Silicon Valley Bank Becomes Second-largest US Bank to Fail

SVB is the greatest bank failure since the Great Recession of 2008, when Washington Mutual Bank with $307 billion in assets failed and was ultimately bought by JP Morgan. On Wednesday, panic spread across SVB when the bank announced a $2.25 billion capital raising and a $21 billion bond portfolio sale to reorganize its balance sheet. The latter transaction resulted in a $1.8 billion loss for the company.

The next day, Paypal co-founder Peter Thiel advised corporations to leave SVB, while the bank’s CEO implored clients to “remain cool”. According to CNBC, once SVB’s planned raising failed, several corporations began investigating the bank in the hopes of purchasing it.