Silicon Valley Bank: Regulators offer plan to ‘ensure U.S. banking system continues to perform its vital roles’
Federal regulators said Sunday they were taking steps to ensure that depositors of the failed Silicon Valley Bank will have access to all their money on Monday.
The Federal Reserve, the Treasury Department and the Federal Deposit Insurance Corporation announced that the bank’s troubles posed a systemic risk to the financial system, allowing regulators to take the unusual step of guaranteeing the deposits.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
a run on Silicon Valley Bank last week threatened to prevent most depositors from having access to savings over $250,000, which typically are not insured by the FDIC, and only hours before trading began in Asia.
The bank’s failure marks the second largest in U.S. history after the 2008 demise of Washington Mutual. It came because tech companies struggled to get financing as venture capital funding dried up and began withdrawing their cash from SVB. To cover the withdrawals, the bank was forced to sell bonds at a loss because of rapidly rising interest rates over the past year.
The Fed said it will provide the financing by offering loans of up to a year to eligible banks and other financial institutions.
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Regulators had worked all weekend to try and come up with a buyer for the bank or broker another intervention.
FDIC puts Silicon Valley Bank up for auction
The Federal Deposit Insurance Corporation began entertaining bids for Silicon Valley Bank on Saturday evening, according to Bloomberg News, who first broke the story.
Bids are due by Sunday afternoon.
The Bank of London confirmed that they had submitted a bid for the failed bank, which was closed on Friday, March 10, by the California Department of Financial Protection Innovation.
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“Silicon Valley cannot be allowed to fail given the vital community it serves,” said Anthony Watson, group chief executive at The Bank of London. “This is a unique opportunity to ensure the UK has a more diversified banking sector, whilst allowing continuity of service to SVB UK’s client base. It would be deeply disappointing for this moment to lead to further consolidation of the power of legacy old US banks.”
The FDIC has created and transferred receivership to Deposit Insurance National Bank of Santa Clara, according to a press release.
A notice posed to SVB’s website reads that depositors can access their insured deposits, of which $250,000 per depositor is insured by the FDIC.
Silicon Valley Bank’s Twitter and Facebook profiles were shut down, and its website has a notice from FDIC and DINB of Santa Clara. It is the first FDIC-insured bank to fail this year.
Associated Press contributed to this report