Financial authorities, bank closure… FDIC Depositor Protection Measures
(New York = Yonhap Infomax) Correspondent Yoon Young-sook = The California financial authorities announced that they would close Silicon Valley Bank (SVB) and designate the Federal Deposit Insurance Corporation (FDIC) as the bankruptcy trustee.
SVB is the 16th largest bank in the United States, and its bankruptcy is the largest since the 2008 financial crisis and the second largest in US history.
According to CNBC, Market Watch, and The Wall Street Journal on the 10th (local time), the FDIC said in a statement that the California Department of Financial Protection and Innovation (CDFPI) has shut down Silicon Valley Bank (SVB).
The FDIC said it established the Santa Clara National Deposit Protection Bank (DINB) to protect depositors and transferred all depositor protection deposits at SVB to DINB upon closure of the bank.
SVB’s main clients are venture-backed startups, which have already struggled to raise funds due to high interest rates and a slowing IPO market.
As of the end of last year, the bank’s assets stood at $209 billion, making it the largest bank to have gone bankrupt since the 2008 financial crisis. It is also the second largest bankruptcy in history following Washington Mutual, a savings bank that went bankrupt during the financial crisis.
According to the FDIC, the bankruptcy of an FDIC-protected bank is the first since October 2020.
There have been reports that SVB is seeking a sale following failing to increase its capital. However, the financial authorities immediately closed the bank without waiting and transferred the deposit to the FDIC jurisdiction. Bank deposits totaled $175.4 billion.
Goldman Sachs supervised the sale of SVB’s shares at $95 per share, but the deal fell through as the stock price continued to decline and customers withdrew additional deposits from the bank, eventually canceling the sale this morning.
SVB instructed its staff this morning to stay home until further notice.
According to the FDIC, deposits subject to depositor protection can be fully accessed from Monday morning at the latest, deposits not subject to depositor protection will be paid in advance within the next week, and bond certificates issued by bankruptcy trustees will be paid for the remaining funds. announced that it will be Branches of SVB will also reopen from Monday morning under supervision of authorities.
According to the FDIC’s standard depositor protection criteria, each bank can receive depositor protection of up to $250,000 per depositor. It’s unclear how much the depositor protection standards affect each company’s account size and credit limit, CNBC said.
Trading in shares of SVB’s parent company, SVB Financial Group (NAS:SIVB), plunged up to 68% in pre-opening trading before being suspended due to the impending news.
U.S. Treasury Secretary Janet Yellen said the bank was monitoring the situation ahead of news of the bank’s closure earlier this morning.
The FDIC said SVB’s loan customers should continue to repay their funds as normal, and SVB’s official checks will continue to be payable.
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This article was served at 03:58, 2 hours earlier on the Infomax financial information terminal.
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