Silicon Valley Bank Closed By Regulators Due To Inadequate Liquidity And Insolvency

(RTTNews) - The California-based Silicon Valley Bank was closed on Friday by regulators, and its assets have been seized due to inadequate liquidity and insolvency.

The California Department of Financial Protection and Innovation appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of Silicon Valley Bank.

The seizure of Silicon Valley Bank's assets marks the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.

Silicon Valley Bank failed on Friday after a bank run on its deposits. A bank run or run on the bank occurs when many clients withdraw their money from a bank, because they believe the bank may fail in the near future. Meanwhile, a Venture capital fund 'Founders Fund' reportedly withdrew all its funds from Silicon Valley Bank" by the morning of March 9th.

The FDIC said that, to protect insured depositors, it 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.

According to the FDIC, 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.

Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on March 13, 2023, the FDIC said. The FDIC said that, as of December 31, 2022, Silicon Valley Bank had about $209.0 billion in total assets and about $175.4 billion in total deposits.

Founded in 1983, Silicon Valley Bank provided financing for almost half of US venture-backed technology and health care companies.

In 2022, SVB began to incur steep losses following increased interest rates and a major downturn in growth in the tech industry, where the bank's liabilities were heavily concentrated.

In a separate press release, Valens Semiconductor (VLN) said Sunday that the company or any of its subsidiaries do not hold cash deposits or securities, nor do they have debt with Silicon Valley Bank.