FDIC closes Silicon Valley Bank after bank fails to raise new capital

[progree]

Last edited Fri Mar 10, 2023, 04:13 PM - Edit history (1)

Source: Yahoo Finance

Troubled lender Silicon Valley Bank has been closed by the FDIC after deposit outflows and a failed capital raise sent the firm into crisis this week.

In a statement released late Friday morning, the FDIC said: "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."

Shares of the bank's parent company, SVB Financial (SIVB), remained halted for trade on Friday after having lost 60% on Thursday and another 60% in pre-market trading on Friday.

The FDIC's statement continued: "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."

Read more: https://finance.yahoo.com/news/fdic-closes-silicon-valley-bank-after-bank-fails-to-raise-new-capital-165322938.html

---

No more at link but it says it is a breaking story that is being updated.

I'm aware of the previous LBN story,

Silicon Valley Bank Financial in talks to sell itself after attempts to raise capital have failed, sources say
https://www.democraticunderground.com/10143044364

but I think that regulators seizing it is more than just a small update to this earlier story. It's the largest bank to fail since the 2008 crisis, according to other news sources. Edit I changed "FDIC seizing it" to "regulators seizing it" after reading USONIAN #5 below and more carefully reading the excerpt above.

Don't confuse Silicon Valley Bank with the crypto-immersed Silvergate Bank / Silvergate Capital. Silicon Valley Bank is a real bank. (Don't ask me what Silvergate Bank is, I don't follow the crypto garbage).

The failure of these 2 banks is a reason that expectations of a half percent Fed rate hike on March 22 -- which was running 2:1 vs. a quarter percent rate hike -- has now been reduced to a 50:50 bet per the CME Fedwatch Tool link https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html -- update, it's now (1252pm ET) a 55:45 bet in favor of the quarter point rate hike. -- Update #2 at 313 PM ET, it's now 60:40 in favor of the quarter point rate hike.