Update at 11:45 a.m. ET: The FDIC has released the following statement:
Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.
All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. 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 had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds. As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
Update at 11:30 a.m. ET: Federal regulators have descended on the Silicon Valley headquarters of SVB Friday morning, according to reports. The Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) have declined to comment on the reports.
The bank has told its employees to work from home for the time being.
The Wall Street Journal has reported that advisory firm Centerview Partners and law firm Sullivan & Cromwell have been called in to help the bank assess its options.
Trading in shares of SVB Financial Group (NASDAQ: SIVB) was halted at 8:35 a.m. ET Friday morning due to pending news. CNBC reported that the harried bank has not been able to raise the cash it needs and is going to put itself up for sale.
Shortly after the opening bell, David Faber at CNBC reported that while there is interest in buying the bank, there are so many depositors pulling their funds out, a potential buyer will have a difficult time placing a value on SVB.
Shares dropped 60% on Thursday and traded down nearly 63% before being halted in Friday’s premarket session.
SVB had filed Thursday for a secondary offering of $1.25 billion in common stock and $500 million in convertible preferred shares. The bank already had announced a $500 million sale of common stock to General Atlantic, contingent on closing the other common stock offer.
We will update this breaking story later this morning.
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