What Makes Business Leaders Influential in 2025?
With technological advancements, shifting consumer expectations, and global interconnectedness, the role of business leaders
March 10, 2023: On Friday, Financial regulators closed down Silicon Valley Bank. They took control of its guarantees, the Federal Deposit Insurance Corp. announced, leaving businesses and wealthy individuals primarily tied to the tech sector unsure of what will happen to their money.
The press releases from regulators, the California group of Financial Protection and Innovation, was closing SVB and named the FDIC the receiver. In turn, the FDIC created the Deposit Insurance National Bank of Santa Clara, which holds the insured deposits from SVB.
The FDIC announced that insured depositors would have access to their deposits by Monday morning. SVB’s branch offices will also reopen under the regulator’s control at that time.
The FDIC also said SVB’s official checks would continue to clear.
The FDIC’s standard insurance hides up to $250,000 per depositor, per bank, for every account ownership category. It is still being determined precisely how the closure will impact larger accounts or credit lines for companies. The FDIC said it would pay uninsured depositors an advanced dividend within the next week.
According to the press release, SVB had roughly $209 billion in assets and $175.4 billion in total deposits in December. The FDIC stated that it was unclear what portion of those deposits exceeded the insurance limit.
SVB was a central bank for venture-backed companies, which were already under pressure because of higher interest rates and a slowdown for initial public offerings, making raising additional cash more difficult.
The closure of SVB would affect not only the deposits but also credit facilities and different forms of financing. The FDIC stated that the loan customers of SVB should continue making their payments as usual.
The move represents a rapid decrease in SVB. On Wednesday, the bank account stated that it was looking to increase more than $2 billion in additional capital following suffering a $1.8 billion loss on asset sales.
On Friday, the shares of parent firm SVB Financial Group fell 60% on Thursday and decreased another 60% in premarket trading before being halted.
On Friday, David Faber reported that the efforts to increase capital had failed and that SVB had pivoted toward a potential sale. Therefore, a rapid outflow of deposits made the sales process hard.
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