Silicon Valley Bank was shut down by the regulator, who controlled the bank’s deposits, the Federal Deposit Insurance Corporation. announced Friday.
The California Department of Financial Innovation and Protection closed the SVB and designated the FDIC as the recipient. In contrast, the FDIC established the Santa Clara National Deposit Insurance Bank, which currently holds insured deposits from SVB.
The FDIC said in the announcement that insured depositors will have access to their deposits by Monday morning at the latest. SVB’s branch offices will also reopen at that time, under the control of the regulator.
The FDIC also said SVB’s official inspections will continue to be clear.
of the FDIC Standard insurance Coverage up to $250,000 per depositor, per bank, per account ownership type. It’s not clear exactly how larger accounts or lines of credit for companies will be affected by the closure. The FDIC said it will pay an advance dividend to uninsured depositors next week.
As of the end of December, SVB had total assets of about $209 billion and total deposits of $175.4 billion, according to the press release. The FDIC did not know what part of those deposits exceeded the insurance limit.
SVB is a big bank for venture-backed companies that have been under pressure from higher interest rates and slowing initial public offerings.
Closing SVB will not only affect deposits, but also credit facilities and other forms of funding. The FDIC said SVB’s borrowers should continue to make payments as usual.
This move represents the rapid demise of SVB. On Wednesday, the bank announced that it was looking to raise more than $2 billion in additional capital after suffering a $1.8 billion loss on asset sales.
Shares of parent company SVB Financial Group fell 60% on Thursday and fell another 60% in premarket trading on Friday before being halted.
CNBC’s David Faber reported Friday morning that fundraising efforts have failed and SVB has headed for a potential sale. However, the rapid outflow of deposits complicated the sales process.
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