bank run

Silicon Valley Bank is the second-largest US bank failure in history

Tech-focused SVB trails only Washington Mutual in total assets at the time of collapse
Silicon Valley Bank was one of the largest banks serving the tech sector in California.
Silicon Valley Bank was one of the largest banks serving the tech sector in California.
Illustration: Dado Ruvic (Reuters)
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The closure of Silicon Valley Bank (SVB) today marked the second-largest US bank failure in history.

SVB held $209 billion in assets at the time of its collapse. Even after adjusting for inflation, by assets it trails only Washington Mutual, which held $434 billion in assets when it failed in 2008.

SVB’s failure surpassed those of Continental Illinois National Bank and Trust in 1984 ($117.2 billion) and First RepublicBank in 1988 ($83.6 billion).

What, if anything, will SVB’s failure portend for the rest of the banking industry?

Other big failures at the top of the list triggered big changes in the banking world. The assets and operations of the failed Washington Mutual, a major US mortgage lender, were acquired by JPMorgan Chase in 2008 at the height of the financial crisis. The deal solidified JPMorgan’s dominance in commercial banking—but also created legal headaches that later made JPMorgan CEO Jamie Dimon voice regrets about the tie-up.

The failure of Continental Illinois in 1984, at the time the biggest bank failure in US history, led federal agencies to provide unusual support to creditors, giving rise to the phrase “too big to fail.”

SVB’s collapse prompted concerns about several other banks, along with debates about the potential for contagion and the risks to customers who aren’t quickly made whole by the FDIC. 

Why did SVB fail?

SVB was shuttered by California’s state banking regulator on March 10, after it reported losses of $1.8 billion in a bond firesale and clients started withdrawing deposits. The bank, which serves as one of the primary regional banks serving northern California’s technology firms, was put under control of the Federal Deposit Insurance Company (FDIC), which promised the bank’s insured clients that it would give them access to their insured funds by March 13.

SVB is the second bank this week to announce it is shutting down. Silvergate Bank, which focused on banking the faltering crypto industry, announced it was closing mere months after FTX, one of its key clients, imploded in what federal prosecutors have alleged was a large-scale fraud.