By Sam Boughedda
In the latest update regarding the rapidly moving SVB Financial Group (NASDAQ:SIVB) saga, the Federal Deposit Insurance Corporation (FDIC) said Friday that SVB has been shut down by the California Department of Financial Protection and Innovation.
The regulator, which appointed the Federal Deposit Insurance Corporation as receiver, revealed that the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB) to protect insured depositors.
"The FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank," the FDIC said in a statement.
They added that all insured depositors will have access to their insured deposits no later than Monday, March 13.
The FDIC said it will pay uninsured depositors an advance dividend within the next week. For any remaining uninsured funds, depositors will receive a receivership certificate. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to certificate holders.
The SVB plunge started Thursday after it revealed it had to sell billions of dollars worth of securities as a loss and was seeking to raise $2.25B in equity to shore up its balance sheet. This caused a wave of concerns, hitting other bank stocks in the process.
As of December 31, 2022, SVB had around $209B in total assets and approximately $175.4B in total deposits, although the FDIC said that at the time of closing, the amount of the deposits in excess of the insurance limits was undetermined.
"The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers," they added.
They also confirmed that the DINB will maintain SVB's normal business hours, with banking activities resuming by Monday.