Regulators have taken over Silicon Valley Bank in Santa Clara, Calif., marking the second-largest bank failure behind Washington Mutual in 2008.
The $209 billion-asset bank was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corp. as receiver.
SVB, the bank’s parent company, had attempted to raise capital after selling $21 billion of underwater securities at a $1.8 billion loss. The securities sales were meant to shore up liquidity after deposit levels plummeted.
The FDIC said it had created the Deposit Insurance National Bank of Santa Clara and transferred all of SVB’s insured deposits to that entity. The agency said all insured depositors “will have full access to their insured deposits no later than Monday morning.”
Uninsured depositors will be paid an advance dividend within the next week, the FDIC said. They will also receive a receivership certificate, and future dividend payments will depend on how the FDIC sells the bank’s assets.
As of Dec. 31, deposits that were under $250,000 and would qualify as insured made up less than 3% of SVB’s total deposits, Gerard Cassidy, an analyst at RBC Capital Markets, wrote in a client note.
SVB was among the nation’s 20-biggest banks. The last bank to fail was Almena State Bank in Kansas in October 2020.