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BREAKING: Silicon Valley Bank Fails. FDIC Takes Over
It's a sad day for Silicon Valley and erodes a core startup lender.
Silicon Valley Bank, the backbone of the Silicon Valley startup ecosystem, has failed.
The Federal Deposit Insurance Corporation has taken over, according to announcement on the FDIC website.
“Silicon Valley Bank is the first FDIC-insured institution to fail this year,” the announcement reads. “The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.”
The takeover raises all sorts of questions about the future availability of loans for startups just as startups need them most.
One former Silicon Valley Bank employee texted me, reflecting on SVB’s unraveling.
“They’re amazing people and it’s such an important institution for the venture ecosystem. Nothing to laugh about here like you see on twitter,” the former SVB employee wrote me. “People are so quick to forget how much of an ally SVB has been and turn around on them on a dime. Sadly I get it. Loyalty goes out the window if you might not make payroll.”
You can read the FDIC announcement below:
WASHINGTON – 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.
Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-866-799-0959.
The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.
Silicon Valley Bank is the first FDIC-insured institution to fail this year. The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.