Silicon Valley Bank shut down by regulator, FDIC named receiver The seizure of SVB's assets marks the largest bank failure since Washington Mutual during the height of the 2008 financial crisis. MONEYCONTROL NEWS MARCH 10, 2023 / 11:20 PM IST

 

SVB was the United States' 16th largest bank, with a total of 17 branches in California and Massachusetts (Image: Reuters)

The Silicon Valley Bank (SVB) has been shut down by regulators, and its assets have been seized, the Federal Deposit Insurance Corporation (FDIC) said on March 10.

The closure order was issued by the California Department of Financial Protection and Innovation, which also named the FDIC as the receiver, as per an official statement.

The FDIC, which is in-charge of protecting SVB's insured deposits, has formed the Deposit Insurance National Bank of Santa Clara to hold the same.

The seizure of SVB's assets marks the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.

SVB was the United States' 16th largest bank, with a total of 17 branches in California and Massachusetts. The bank had $209 billion in assets and $175.4 billion in deposits ahead of being shut down. It was unclear how much of SVB's deposits was above the $250,000 insurance limit at the moment.

The lender acted as a major financial conduit for venture capital-backed companies, which have been hit hard in the past 18 months as the Federal Reserve has raised interest rates and made riskier tech assets less attractive to investors.

Silicon Valley Bank was heavily exposed to tech industry and there is little chance of contagion in the banking sector as a whole, with major banks holding sufficient capital to avoid a similar situation.

The financial health of SVB was increasingly in question this week after the bank announced plans to raise up to $1.75 billion in order to strengthen its capital position amid concerns about higher interest rates and the economy.

Shares of SVB Financial Group, the parent company of Silicon Valley Bank, plummeted nearly 70 percent before trading was halted before the opening bell on the Nasdaq.