The California bank regulator closed SVB and appointed the FDIC as a receiver
Silicon Valley Bank (SVB) was shut down on March 10 by California’s state banking regulator and put under the control Federal Deposit Insurance Corp., which promised to give insured depositors access to their money by the morning of March 13 and will attempt to return funds to uninsured depositors as the agency sells off the bank’s assets.
SVB ran into trouble earlier this week when its venture capital-backed clients started to pull their deposits, after the bank reported $1.8 billion in losses from a bond firesale. The bank attempted to fundraise to cover the loss, and also attempted to find a buyer, all while deposits were rushing out of the bank.
Adding to SVB’s pain, Bloomberg reported that Peter Thiel’s venture capital firm, Founders Fund, advised companies to withdraw money from the bank.
That same environment was bad news for SVB’s portfolio of securities; it couldn’t sell enough bonds, at a high enough price, to recoup the funds needed to repay depositors who were pulling their money from the bank.
As a result, even after adjusting for inflation, SVB has just become the US’s second-biggest bank failure in history, based on assets on the books at the time of failure.
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