Silicon Valley Bank shut down by California regulator
Silicon Valley Bank, a major financial institution for venture-backed companies, was shut down by California’s financial watchdog on March 10 — marking the first Federal Deposit Insurance Corporation-insured bank to fail in 2023.
The California Department of Financial Protection and Innovation confirmed that Silicon Valley Bank was ordered to close but did not specify the reason for the shutdown. The California regulator appointed the FDIC as the receiver to protect insured deposits.
Depositors “will have full access to their insured deposits no later than Monday morning, March 13, 2023,” read the official statement. The regulator explained that uninsured depositors would be given a “receivership certificate for the remaining amount of their uninsured funds” and entitled to future dividend payments once the FDIC sells all of Silicon Valley Bank’s assets.
Silicon Valley Bank, which is also known as SVB, operated 17 branches across California and Massachusetts. All branches and the main office will be open on March 13 to facilitate depositor access.
SVB is one of the United States’ 20 largest banks by total assets. The bank provided financial services to several crypto-focused venture firms, including Andreessen Horowitz and Sequoia.
The bank's downfall was swift, coming less than 48 hours after management disclosed that they needed to raise $2.25 billion in stock to shore up operations. The announcement was part of SVB's mid-quarter financial update, where it disclosed the sale of $21 billion in securities at a $1.8 billion loss.
Trading in SVB stock was halted on March 9 due to extreme volatility. The stock's 60% drop was the biggest single-day wipeout in history, according to The Wall Street Journal.
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