The Federal Deposit Insurance Corporation (FDIC) has seized the assets of Silicon Valley Bank Friday, the largest bank to fail since the 2008 financial meltdown, The Associated Press reported. It was the first to fail since Almena State Bank in Kansas went under in October 2020, the FDIC said.
The shutdown was ordered by the California Department of Financial Protection and Innovation, CNBC reported.
Depositors had made a run on the bank, pulling their money. Most of the bank’s customers were technology workers and venture capital-backed companies, the AP reported.
The FDIC announced that it will be setting up the Deposit Insurance National Bank of Santa Clara, to help protect depositors whose accounts are insured.
All of the insured deposits of Silicon Valley Bank will be transferred into the new bank with customers able to get their money no later than Monday morning from all 17 branches and the main office of Silicon Valley Bank during normal business hours, the FDIC said.
The FDIC’s standard insurance has a set limit: $250,000 per customer, per bank for each type of account category. For accounts that have more than that amount in them, it is unclear how they will be impacted, CNBC reported.
Uninsured depositors will also get some money back, an advanced dividend which will be paid out by the FDIC within the next week.
Silicon Valley Bank had about $209 billion in assets and $175.4 billion in deposits as of the end of last year, the FDIC said. The bank is said to be considering a sale of billions of dollars of assets which started a Wall Street panic earlier this week, CNN reported.
Shares of Silicon Valley Bank were stopped Friday after plummeting 60% in premarket trading. It lost 60% on Thursday after the bank sold U.S. Treasuries and $1.75 billion in shares at a loss all to cover deposits that were being withdrawn by customers, CNN reported.
As for customers who have taken out loans through Silicon Valley Bank, they’re being instructed to continue making payments as normal, CNBC reported.
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