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FDIC Takes Control of Silicon Valley Bank Deposits After Closure

The California Department of Financial Protection and Innovation announced yesterday that Silicon Valley Bank (SVB) has been closed and the Federal Deposit Corporation (FDIC) has been assigned to take charge of the bank’s deposits. The FDIC has established the Deposit Insurance National Bank of Santa Clara (DINB) to protect the interests of depositors and transferred all deposits from guaranteed SVBs into DINB.

According to FDIC regulations, deposit owners will be able to access their deposits as early as Monday, March 13, when SVB branches will be open, but FDIC regulated. However, deposit protection is only up to $250,000 per depositor per bank.

CNBC previously reported that SVB Financial Group, the parent company of Silicon Valley Bank, lends to technology startups. SVB’s total assets were about $209 billion and deposits were $1754 billion as of the end of December 2022.

SVB shares fell 45.61% before the market opened yesterday and dropped 60.41% to $106.04 after the market closed yesterday. In response to this situation, SVB announced plans to sell shares to investors for $2.25 billion to raise liquidity.

The bank suffered a loss of $1.8 billion on the sale of US Treasury bonds, which has greatly reduced the value of the portfolio. The US Federal Reserve announced to continue raising interest rates to curb inflation, exacerbating the situation. SVB is also facing cash flow problems as startups withdraw deposits from banks.

Last week, SVB had a market capitalization of $16.8 billion, but as of yesterday’s close, its market capitalization was only $6.3 billion. It is expected that the market value will decrease further after today’s market close.

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