Silicon Valley Bank Closed Down; 2nd Largest Failure of Financial Inst in US History

US regulators on Friday shut down Silicon Valley Bank. It is termed the biggest banking failure since the 2008 financial crisis in America. This move sent global banking shares into turmoil.

California regulators closed down the tech lender and put Silicon Valley Bank under the control of the US Federal Deposit Insurance Corporation (FDIC). The FDIC as a receiver will liquidate the bank’s assets to pay back its customers, including depositors and creditors. All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023, read FDIC statement.

Silicon Valley Bank collapsed after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.

The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.

Silicon Valley Bank’s decline is said to be due to the Federal Reserve’s aggressive interest rate hikes over the past year. This bank had 17 branches in California and Massachusetts.

As of December 31, 2022, Silicon Valley Bank had approximately USD 209.0 billion in total assets and about USD 175.4 billion in total deposits.