The California Department of Financial Protection announced the closure of the Silicon Valley Bank (SVB) owing to a lack of liquidity and announced new measures to ensure the protection of deposits.
In addition, the department transferred asset management to the Federal Deposit Insurance Corporation (FDIC) to protect deposits so that insured customers can have access to their funds by Monday.
Those who do not have deposits not guaranteed by the authorities will receive a payment from the FDIC in addition to a certificate for the value of their funds that will be paid as the bank’s assets are sold.
The FDIC also asked SVB customers to contact SVB if they had open accounts of more than $250,000, the standard insured amount in the country.
1/1 The FDIC today created the Deposit Insurance National Bank of Santa Clara to protect insured depositors of Silicon Valley Bank, which was closed this morning by state bank regulators in California. 🧵https://t.co/87KpYGKymy
— FDIC (@FDICgov) March 10, 2023
According to FDIC data, Silicon Valley Bank had 17 entities in the states of California and Massachusetts, plus assets of $209 billion and about $175.4 billion in deposits at the time of its closing in 2022.
The bank announced that it would seek more capital to alleviate financial difficulties that caused it to unwind $21 billion worth of investments, resulting in a loss of $1.8 billion.
The announcement prompted customers to withdraw their funds and caused the company’s stock price to plunge, affecting the banking sector in the United States and other countries.
According to Wall Street statistics, SVB opened in red, but after the news, it fell even further.