- California regulator closes SVB, appoints FDIC as receiver.
- SVB focused on lending to start-ups; branches to reopen Monday.
- FDIC to sell bank assets; ‘chaos’ reported amid withdrawals.
- Bank shares fall in U.S., Europe, but well-off lows.
- Crisis exposes banking ‘vulnerabilities’ amid rising rates.
Silicon Valley Bank, a lender to some of the biggest names in the technology world, became the largest bank to fail since the 2008 financial crisis. The move put nearly $175 billion in customer deposits under the control of the Federal Deposit Insurance Corp. Here’s what we know so far about this developing story.
The California Department of Financial Protection and Innovation shut down Silicon Valley less than two days after the bank tried to persuade clients not to pull their money over concerns it was running low on available cash. The regulator appointed the Federal Deposit Insurance Corp. as the receiver.
The FDIC created a new bank, the National Bank of Santa Clara, to hold the deposits and other assets of the failed one. The agency said in a news release that the new entity would be operating by Monday morning and that checks issued by the old bank would continue to clear.
Flush with cash from high-flying start-ups, Silicon Valley Bank bought huge amounts of bonds more than a year ago. Like other banks, Silicon Valley Bank kept a small amount of the deposits on hand and invested the rest with the hope of earning a return.
That had worked well until the Federal Reserve began raising interest rates last year to cool inflation. At the same time, start-up funding started to dry up, putting pressure on many of the bank’s clients — who then began to withdraw their money. To pay those requests, Silicon Valley Bank was forced to sell off some of its investments at a time when their value had declined. In its surprise disclosure on Wednesday, the bank said it had lost nearly $2 billion.
Latest Updates
- Silicon Valley Bank’s demise began with downgrade threat
- US lawmakers met Fed, FDIC to discuss Silicon Valley Bank’s collapse – Coindesk
- Crypto firm Circle reveals $3.3 bln exposure to Silicon Valley Bank
- Li Qiang becomes China’s premier, tasked with reviving economy
- SVB shutdown sends shockwaves through Silicon Valley as CEOs race to make payroll.
