- The bank was shut down by authorities and transferred to the supervision of FDIC.
- On Wednesday, SVB reported that it had sold several instruments at a loss.
As a result of a bank run and a capital problem, Silicon Valley Bank was the second biggest financial institution to fail in the United States. It went under on a Friday morning.
The bank in California was shut down by authorities and transferred to the supervision of the US Federal Deposit Insurance Corporation. The FDIC has taken on the role of receiver, which usually means it will liquidate the bank’s assets to repay its creditors and depositors.
All insured depositors should expect to have full access to their guaranteed savings by no later than Monday morning, as promised by the FDIC, an independent federal organization that protects bank deposits and governs financial institutions. The company promised uninsured depositors an “advance dividend within the next week.”
Circle Facing the Heat
On Wednesday, SVB reported that it had sold several instruments at a loss. And would sell $2.25 billion in new shares to shore up its balance sheet. Key venture capital firms allegedly instructed their clients to immediately remove their funds from the bank.
On Thursday, the company’s stock plummeted, bringing down the value of other financial institutions along with it. Moreover, on Friday morning, SVB ceased trading its stock and said it would no longer seek a rapid cash infusion or a buyer. On Friday, trading in shares of First Republic, PacWest Bancorp, and Signature Bank was briefly stopped.
The FDIC’s intervention in the middle of the morning seemed out. Since it is not uncommon for the agency to wait until the market closes before acting. Shares of SVB plummeted as news of a run spread. USDC issuer Circle is facing the heat as the firm confirmed exposure to the bank. USDC depegged ever since the news broke.
