Status: 03/10/2023 7:44 p.m
A billion-dollar capital shortfall has opened up at one of the largest financiers of start-ups. US authorities seized Silicon Valley Bank’s assets. Deposits in the billions were transferred to a newly formed bank.
Silicon Valley Bank has ceased operations in the United States. Bank insurer Federal Deposit Insurance Corporation confiscated the big bank’s assets.
Bank customers who withdrew their money from the US money house, which specializes in start-up financing, contributed to this. The majority of clients are technology sector employees and companies powered by venture capital.
Insured deposits were transferred to special purpose entity
The FDIC, the public deposit insurance fund, said the bank had $209 billion in assets and $175.4 billion in deposits. The fact that the assets were confiscated in the middle of a working day in the USA showed the seriousness of the situation.
Insured deposits at the California bank were transferred to a special purpose vehicle created by the FDIC called DINB, the FDIC said. The 17 branches of the SVB should reopen on Monday under the supervision of this DINB. The holders of insured deposits will then have access to their deposits. Owners of uninsured deposits – in the US usually amounts over 250,000 dollars – around 237,000 euros – should report to the FDIC and then first receive a certificate of ownership of the money.
Shares in the parent company fell by 70 percent
The bank’s viability had been called into question this week. The bank said it would raise up to $1.75 billion to bolster liquidity amid concerns about higher interest rates and the economy. The broadcaster CNBC reported that the plan to get more money had failed.
Shares in the bank’s parent company, SVB Financial Group, fell nearly 70 percent. Silicon Valley Bank is the 16th largest bank in the US. The problems of the SVB had triggered uncertainty on the stock exchanges worldwide and caused bank stocks in particular to collapse in Europe as well.
The voluntary resolution of US crypto bank Silvergate Capital had already sent shockwaves through parts of the financial sector on Thursday. Silvergate announced that it would repay all customer deposits.