Silicon Valley Bank's all deposits transferred to new bridge bank, normal operations to resume: FDIC

Before the US regulators stepped in on March 12 to backstop all SVB deposits, many startups were at the brink of closure. (Source: Reuters)

The US Federal Deposit Insurance Corporation (FDIC), which has been made the receiver of the crisis-hit Silicon Valley Bank, on March 13 said all deposits of the lender have been transferred to a new bridge bank.

The bridge bank, Deposit Insurance National Bank of Santa Clara (DINB), will resume normal banking operations for SVB customers from the starting business hours of March 13, the FDIC said in a statement.

The DINB will maintain Silicon Valley Bank’s "normal business hours", and all banking activities, including ATM services and online banking, will continue, the US agency noted, adding that loan customers should "continue to make their payments as usual".

Uninsured depositors will receive a "receivership certificate" for the remaining amount of their uninsured funds, FDIC said. "As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors," it added.

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Silicon Valley Bank, a subsidiary of SVB Financial Group, was shut down by the California Department of Financial Protection and Innovation on March 10, after depositors rushed to withdraw their funds all at once.

The bank had approximately $209 billion in total assets and about $175.4 billion in total deposits, before being gripped by the crisis. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined.

The regulatory seizure of SVB's assets marked the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.

In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said on March 12 that all Silicon Valley Bank clients would be protected and able to access their money. They also announced steps that are intended to protect the bank’s customers and prevent additional bank runs.

In a separate announcement, the Federal Reserve had said on March 12 that an expansive emergency lending programme would be rolled out to prevent a wave of bank runs that would threaten the stability of the banking system and the US economy as a whole.

Fed officials characterised the programme as akin to what central banks have done for decades: Lend freely to the banking system so that customers would be confident that they could access their accounts whenever needed.

With AP inputs