US Silicon Valley Bank Shuts Down

The California Department of Financial Protection and Innovation (DFPI) on Friday closed Silicon Valley Bank to protect customer deposits and will reopen March 13 under federal control, according to official sources.

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The Federal Deposit Insurance Corporation (FDIC) has been appointed receiver for further disposition of the bank's assets.

All insured depositors will have full access to their insured deposits as of Monday, the FDIC said noting that 89 percent of the bank's $175 billion in deposits were uninsured at the end of 2022, so their fate has yet to be determined.

The DFPI "took possession of Silicon Valley Bank, citing inadequate liquidity and insolvency," the Californian agency said.

SVB is the first entity with deposits guaranteed by the federal corporation to fail since 2020, according to the FDIC.

Silicon Valley Bank (SVB) was a California bank specializing in the technology sector, doing business primarily with funds that invest in unlisted companies.

It was the 16th largest U.S. bank by asset size. The bank's parent, SVB Financial Group, announced that it would seek to raise $2.25 billion in new funds.

Seeking to strengthen its finances, weakened by customer withdrawals, SVB sold a $21 billion portfolio of financial securities at an estimated loss of $1.8 billion.

The bank was unable to raise the necessary capital and was negotiating its sale to another bank prior to the announcement by regulatory authorities, the specialized economic channel CNBC said.