Silicon Valley Bank (SVB)

SVB failed on Friday, March 10; and on Monday, March 13, the Federal Deposit Insurance Corporation (FDIC) transferred all deposits — both insured and uninsured — and substantially all of SVB’s assets, including all qualified financial contracts, to Silicon Valley Bridge Bank, N.A. (SVBB). On March 14, SVBB confirmed all commitments to advance funds under all existing credit agreements.

Sale

Typically, the FDIC has a 90-day window to arrange a sale when it determines a bank may fail. Further, applicable law requires the FDIC to accept the arrangement that is least expensive to the insurance fund. The process involves estimating asset values, assessing the failed bank’s insured deposits, accepting bids, and setting up a receivership to manage any remaining balance sheet items. Initially, the FDIC received no realistic offers for the former SVB. The former SVB’s loan portfolio focuses on the startup sector, primarily in the tech industry.

On Sunday, March 26, 2023, the FDIC announced that it entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company (First-Citizens) for all deposits and loans of SVBB. Depositors of SVBB will automatically become depositors of First-Citizens, with accounts insured up to the insurance limit. First-Citizen will assume $56 billion of deposits, and material amounts of loans and other assets. As to the commercial loans, the FDIC and First-Citizens have entered into a loss-share agreement. Approximately $90 billion in securities and other assets will remain in FDIC receivership for disposition.

For More Information

As the situation regarding the collapse of Silicon Valley Bank and Signature Bank evolves, we strive to provide you with regular updates while we continue to monitor and assess current developments.