After Silicon Valley Bank (SVB) experienced financial turmoil, the US Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation closed the financial institution. Insured depositors can withdraw their funds on Monday after the FDIC takes over the failed bank.
Federally insured depositors to withdraw funds Monday, uncertainty looms for depositors with accounts above $250,000
On Friday, US regulators closed Silicon Valley Bank (SVB) following a significant drop in the firm’s stock value and reports of a build-up in deposits at the bank. SVB shares were suspended on the Nasdaq and rumors began to circulate that the bank was looking for a buyer. Shortly thereafter, the California Department of Financial Protection and Innovation and the FDIC shut down SVB.
The FDIC announced that federally insured depositors of up to $250,000 could withdraw their funds on Monday. It is not certain how the bank will handle the larger deposits. “During the closing, the FDIC as receiver immediately transferred all of Silicon Valley Bank’s insured deposits to DINB,” the agency explained Friday. Depositors with accounts over $250,000 can contact the FDIC to seek a resolution.
The regulator noted that as of the end of 2022, SVB had $209 billion in assets and $175.4 billion in deposits. “At the time of the closing, the amount of deposits in excess of insured limits was not determined,” the FDIC’s statement warned. “The amount of uninsured deposits will be determined after the FDIC receives additional information from the bank and its customers.”
The failure of Silicon Valley Bank is one of the largest bank failures in the United States since bankruptcy of Washington Mutual (Wamu). The bankruptcy of SVB comes shortly after the liquidation message from Silvergate Bank, a crypto-friendly financial institution that has said it’s going out of business.
What do you think the closing of Silicon Valley Bank and the recent liquidation announcement from Silvergate Bank say about the state of the banking industry? Share your thoughts on this topic in the comments section below.
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