Silicon Valley Bank was closed by financial regulators on Friday after the bank could not raise capital.
The Federal Deposit Insurance Corp (FDIC) said it took control of the bank through a new entity it created called the Deposit Insurance National Bank of Santa Clara. The FDIC noted insured depositors would have access to their funds by Monday. The FDIC covers up to $250,000 per account.
- SVB shares fell more than 65% in premarket trading on Friday after declining more than 60% on Thursday.
- Trading in SVB was suspended shortly after 8:30 a.m. ET Friday.
- Signs of trouble started on Wednesday when SVB said it would book a $1.8B post-tax loss on the sales of some securities.
- The bank wanted to raise $2.25B between common equity and convertible preferred shares.
- The announcement raised concerns across the banking sector, with the four largest U.S. banks losing $52B in market value on Thursday.
- Some VCs, including Founders Fund co-founder Peter Thiel, advised their portfolio companies to pull their money from SVB amid rising concerns about the bank’s financial health.
- Early Friday morning, it was reported SVB was in talks to sell itself after attempts to raise capital failed.
- Late Friday morning, the California Department of Financial Protection and Innovation closed SVB and appointed the FDIC as receiver.
- As of Dec. 31, SVB had roughly $209B in total assets and $175.4B in total deposits.
- The FDIC said SVB’s main office and 17 branches in California and Massachusetts would reopen on Monday.
