Silicon Valley Bank, based in Santa Clara, California, was closed on March 10, 2023, by the California Department of Financial Protection and Innovation. This decision was made in response to the bank’s financial instability. The Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver, and the Deposit Insurance National Bank of Santa Clara (DINB) was created to protect insured depositors.
Setting up Deposit Insurance National Bank of Santa Clara (DINB)
As the receiver of Silicon Valley Bank, the FDIC immediately transferred all insured deposits to the DINB to protect insured depositors. Uninsured depositors will receive an advance dividend within the next week and a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the bank’s assets, future dividend payments may be made to uninsured depositors. All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023.
Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s regular business hours, and banking activities will resume no later than Monday, March 13, 2023, including online banking and other services.
What Happens to Customers with Excess Deposits?
As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At closing, the number of deposits over the insurance limits was undetermined. Customers with accounts over $250,000 should contact the FDIC toll-free at 1-866-799-0959.
Loan customers should continue to make their payments as usual, and the FDIC, as the receiver, will retain all the assets from Silicon Valley Bank for later disposition. Silicon Valley Bank is the first FDIC-insured institution to fail this year, with the last FDIC-insured institution to close being Almena State Bank, Almena, Kansas, on October 23, 2020.
The closure of Silicon Valley Bank has raised concerns about the stability of the banking industry in California. The FDIC’s swift action to protect insured depositors is commendable, but it remains to be seen how the bank’s failure will impact the local economy. The FDIC’s role as a safety net for depositors ensures that the public’s confidence in the banking system remains intact.