The feds shut down Silicon Valley Bank on Friday, marking a stunning collapse for the tech lender that has sparked fears of a wider contagion in the banking sector.
The California Department of Financial Protection and Innovation shuttered SVB and named the Federal Deposit Insurance Corp. as its receiver, officials said in a release.
“To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB),” the FDIC said in a statement.
“At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.”
The FDIC said insured depositors will “have full access to their insured deposits no later than Monday morning.” The feds added that SVB’s official checks will “continue to clear” despite the closure.
“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,” the FDIC added.
As of the end of last year, SVB had approximately $209 billion in total assets and roughly $175.4 billion in total deposits, according to the agency.
SVB was a preferred banking partner for tech startups and venture capital firms in the area. But the bank’s finances went south in recent months as worsening economic conditions and a major slowdown in the initial public offering market led clients to pare their deposits.
In New York, police were reportedly called to a local SVB branch on Friday morning after depositors swarmed the building in a bid to withdraw their money.
Earlier this week, SVB disclosed a $1.8 billion loss after conducting a $21 billion fire sale of its bond assets. The revelation has led a growing number of worried Silicon Valley luminaries, including Peter Thiel’s Founders Fund, to pull their cash.
As The Post reported, SVB CEO Greg Becker begged investors to “stay calm” as the bank sought a solution for its liquidity crisis.68
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Trading of SVB Financial shares remained halted on Friday morning following a CNBC report that the embattled firm was attempting to sell itself. The bank tapped advisers to assist with a potential sale after failing to raise capital.
SVB has not responded to multiple requests for comment.
Per: NYP
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