New Delhi, March 11: SVB Financial Group (SIVB.O), a lender with a focus on startups, experienced an abrupt collapse on Friday that left billions of assets belonging to businesses and investors stranded and made it the largest bank failure since the financial crisis.
The bank, which operated under the name Silicon Valley Bank, was shut down by California banking regulators on Friday and the Federal Deposit Insurance Corporation (FDIC) was named as receiver for a subsequent sale of its assets. The FDIC announced that Silicon Valley Bank’s main office and all of its branches will reopen on March 13 and that all insured depositors will have complete access to their insured deposits by Monday morning.
However, according to the FDIC, 89% of the bank’s $175 billion in deposits were not insured as of the end of 2022, and it is still unclear what will happen to them.
Businesses like streaming device maker Roku Inc (ROKU.O) and video game developer Roblox Corp RBLX.N claimed to have hundreds of millions of dollars deposited at the bank. When Roku revealed that the majority of the deposits it had with SVB were uninsured, its shares fell 10% in the extended session.
Technology workers who depended on the bank for their salaries were similarly concerned about receiving their money on Friday. Customers at an SVB location in San Francisco were instructed to call a toll-free number in a notice that was pinned to the door.
The FDIC announced that it will try to sell SVB’s assets and hinted that future dividend payments to uninsured depositors would be paid. The FDIC has occasionally acted swiftly in the past, even negotiating arrangements to sell significant banks over the weekend. Requests for comment to SVB were not answered.
The lender had come to be seen as a reputable source of finance by the startup community, which was shocked by the bankruptcy. On Friday, customers of the bank encountered closed doors. A bank client in the UK informed Reuters that a client dashboard was unavailable.
According to a Reuters assessment, the value of US banks’ stock market holdings has decreased by more than $100 billion over the last two days, and the value of European banks has decreased by almost $50 billion. On Friday, regional banks saw a decline.