The collapse of Silicon Valley Bank (SVB) has created a plethora of legal issues and potential risks for the financial sector and other sectors, including many of our clients. We have created a multi-practice Task Force to advise those affected by this incident and other issues that will arise in connection. Visit our Addressing the legal implications of the Silicon Valley Bank closure Topic Center for additional resources. Questions and concerns may be directed to the Silicon Valley Bank (SVB) Task Force at SVBTaskForce@hoganlovells.com.

1. My entity had more than $250,000 on deposit at SVB or Signature Bank. What happens to those amounts?
   1. The U.S. Department of the Treasury, Federal Reserve, and FDIC, in a joint statement, have acted to ensure that all depositors will have access to all of their deposit funds at SVB (both FDIC-insured and uninsured amounts) starting Monday, March 13. Before this joint statement was issued, depositors were only guaranteed to have access to deposits that were FDIC-insured.
   2. Depositors of Signature Bank, New York, NY, which was closed on Sunday, March 12, will also have access to all of their deposit funds. Shareholders and certain unsecured debtholders will not be protected.
   3. The Federal Reserve Board announced on Sunday, March 12, that it will make available additional funding under its systemic risk exception to eligible depository institutions to assure that banks have the ability to all depositors’ needs, and that it is prepared to address any liquidity pressures that may arise.
   4. This Bank Term Funding Program will be funded by additional assessments on banks and will not be taxpayer funded.
2. Is another bank going to come and rescue SVB or Signature Bank?
   1. In the cases of both SVB and Signature Bank, the FDIC has transferred all deposits (both FDIC-insured and uninsured) and substantially all assets of the former SVB and Signature Bank to respective “bridge banks,” which are both full-service temporary national banks chartered by the U.S. Department of the Treasury’s Office of the Comptroller of the Currency, created and controlled by the FDIC. These new institutions are designed to “bridge” the gap in time between the failure of the original institutions and the time it takes the FDIC to evaluate the value of the banks’ assets and find an acquiring bank or arrange for an orderly resolution. The FDIC is operating both bridge banks to maintain banking services with minimal disruption.
3. Do I need to file to collect deposit insurance?
   1. Depositors do not need to apply for FDIC insurance or make any filing with the FDIC to protect their deposits in SVB or Signature Bank. As stated above, all insured and uninsured deposits held at SVB and Signature Bank are safe.
4. The funds to pay my company’s next payroll were on deposit at SVB or Signature Bank. Will my payroll servicer have access to these funds?
   1. The payroll servicer should be able to access all funds in deposit accounts at SVB and Signature Bank; after the joint statement referenced above, there is no concern that uninsured deposit amounts will be unavailable.
5. Will services still be available at SVB or Signature Bank, and if available, which ones?
   1. Former Deposit Insurance National Bank of Santa Clara (now known as Silicon Valley Bridge Bank, N.A.) and Signature Bridge Bank, N.A. opened their doors on Monday, March 13^th and are intended to supply customers uninterrupted customer service and access to their funds. Customers may continue to write personal checks, make deposits, and use ATM/Debit cards. Routing and account numbers will also remain the same until customers are notified in writing by Silicon Valley Bridge Bank, N.A. or Signature Bridge Bank, N.A.
6. Is Silicon Valley Bridge Bank, N.A. or Signature Bridge Bank, N.A. now my bank?
   1. Yes, for a limited period of time, which will range from around 90 days to no longer than three years. Customers should seek a new bank relationship for services going forward.

7. Will SVB or Signature Bank file for Bankruptcy?
   1. No, the Bankruptcy Code does not cover banks. Instead, the FDIC receivership process provides for the orderly distribution of a bank’s assets. The bank holding companies may use the Bankruptcy Code.

8. My company had a loan with SVB or Signature Bank and a payment is due at the end of the month – how will I be able to avoid default?
   1. The FAQs published by the FDIC state that loan customers should continue to make their payments as usual according to the terms of their written loan agreements. All escrow services previously performed related to your loan will continue. Until a borrower is notified of any change, it should continue to make payments as usual.
9. I’m a borrower of SVB or Signature Bank. Can I draw on my committed line of credit or other committed credit facility?
   1. Possibly, but this is not yet clear. Currently, all lines of credit have been transferred to Silicon Valley Bank, N.A. and Signature Bridge Bank, N.A. and the FDIC recommends contacting either bridge bank directly. More information should be available from the FDIC soon.
10. What will happen to scheduled automatic payments and bill pay services from SVB or Signature Bank accounts?
    1. Automatic payments services from SVB or Signature Bank accounts will continue as usual, with routing numbers and account numbers remaining the same until you are notified in writing by either bridge bank.

11. What will happen to direct deposit services at SVB or Signature Bank?
    1. All direct deposits or any payment you receive electronically will continue as usual, including for social security, payroll, veterans’ benefits, disability, or unemployment. The bridge banks will operate only for a limited period of time, and we recommend establishing new banking relationships going forward.

12. My company has incoming wire transfers scheduled to go into my deposit account at SVB or Signature Bank– should I cancel them?
    1. There is no immediate need to cancel these wires. They will arrive and be handled in the ordinary course. We recommend seeking a new banking relationship going forward.

If you have questions about Silicon Valley Bank UK, please see Silicon Valley Bank UK Limited FAQs - Hogan Lovells Engage

Helpful Resources:

• FDIC: PR-19-2023 3/13/2023 Press Release: FDIC Acts to Protect All Depositors of the former Silicon Valley Bank, Santa Clara, California
• FDIC: PR-18-2023 3/12/2023 Press Release: FDIC Establishes Signature Bridge Bank, N.A., as Successor to Signature Bank, New York, NY