In a decisive move to safeguard depositors, the Federal Deposit Insurance Corporation (FDIC) announced the transfer of all deposits and a substantial portion of the assets of the former Silicon Valley Bank (Svb Bank) to a newly established ‘bridge bank’. This FDIC-operated entity, named Silicon Valley Bridge Bank, N.A., is designed to ensure that all SVB bank depositors, both insured and uninsured, have full access to their funds.
Starting this morning, depositors can access their money as Silicon Valley Bridge Bank, N.A. commences normal banking operations. This includes online banking services, ATM access, debit card transactions, and check writing, all functioning as they did prior to SVB bank’s closure. Customers of the former SVB bank automatically become customers of the bridge bank, ensuring a seamless transition and continued access to their accounts. Loan customers are also advised to continue making loan payments as usual.
The California Department of Financial Protection and Innovation closed Silicon Valley Bank on Friday, March 10, 2023, appointing the FDIC as receiver.
This comprehensive deposit transfer was executed under the systemic risk exception approved yesterday. This measure ensures that all SVB bank depositors will be made whole, emphasizing that taxpayers will not bear any losses associated with the resolution of Silicon Valley Bank. However, shareholders and holders of certain unsecured debt will not receive protection. Furthermore, senior management of the failed SVB bank has been removed. Any potential losses to the Deposit Insurance Fund to cover uninsured depositors will be recouped through a special assessment on banks, as mandated by law.
The FDIC receiver for Silicon Valley Bank has also transferred all Qualified Financial Contracts to the bridge bank. This action further protects depositors and aims to preserve the value of Silicon Valley Bank’s assets and operations. This strategy is intended to potentially improve recoveries for creditors and the Deposit Insurance Fund.
A bridge bank, like Silicon Valley Bridge Bank, N.A., is a nationally chartered bank operating under an FDIC-appointed board. It takes over the deposits, certain liabilities, and assets of a failed bank. The bridge bank structure serves as a temporary measure to stabilize the failed institution, allowing the FDIC to implement an orderly resolution.
Tim Mayopoulos has been appointed as CEO of Silicon Valley Bridge Bank, N.A. Mr. Mayopoulos brings significant experience, having previously served as president and CEO of the Federal National Mortgage Association and president of Blend Labs, Inc.
Additional Resources:
Failed Bank Information for Silicon Valley Bank, Santa Clara, CA
