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Business News/ Companies / News/  This bank will protect insured and uninsured depositors trapped in Silicon Valley Bank failure
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This bank will protect insured and uninsured depositors trapped in Silicon Valley Bank failure

Data from FDIC showed that as of December 31, 2022, SVB's total assets stood at $209.0 billion --- while its total deposits were approximately around $175.4 billion. About 89% of the bank's total deposits are uninsured.

Post the shutdown of the Silicon Valley Bank, the California department has appointed FDIC as the receiver. (AFP)Premium
Post the shutdown of the Silicon Valley Bank, the California department has appointed FDIC as the receiver. (AFP)

Billions of dollars of investors' wealth either individuals or companies are stranded due to the crisis in Silicon Valley Bank. Dramatically, SVB which is a lender to some of the renowned tech biggies, unicorns, and start-ups has been shut down due to concerns over lower cash availability. This led to a storm of many companies frantically trying to remove their money from SVB. However, the task is difficult and uncertain. Companies are in a panic! Nevertheless, Federal Deposit Insurance Corporation (FDIC) has created a bank that will protect both insured and uninsured depositors at SVB.

Post the shutdown of the Silicon Valley Bank, the California department has appointed FDIC as the receiver.

On March 10, FDIC created the Deposit Insurance National Bank of Santa Clara (DINB).

In a statement on March 10, FDIC said, "at the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank."

According to FDIC, all insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023.

But what about uninsured depositors?

FDIC plans to pay uninsured depositors an advance dividend within the next week. Further, these uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds.

Data from FDIC showed that as of December 31, 2022, SVB's total assets stood at $209.0 billion --- while its total deposits were approximately around $175.4 billion. About 89% of the bank's total deposits are uninsured.

FDIC said, as it sells "the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors."

Currently, SVB has 17 branches in California and Massachusetts.

FDIC said, 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 normal business hours.

Further, it said, the banking activities will resume no later than Monday, March 13, including online banking and other services.

Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.

Also, FDIC directed customers with accounts in excess of $250,000 should contact their toll–free at 1-866-799-0959.

FDIC said, as a receiver it will retain all the assets from Silicon Valley Bank for later disposition. Also, it asked loan customers should continue to make their payments as usual.

SVB would be the first FDIC-insured institution that failed this year. The last FDIC-insured institution that failed was Almena State Bank, Almena, Kansas in October 2020.

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Updated: 12 Mar 2023, 03:51 PM IST
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