US financial regulators have closed Silicon Valley Bank and taken control of its deposits, the Federal Deposit Insurance Corporation announced on Friday.
At the moment it is the largest US bank failure since the global financial crisis more than a decade ago.
The collapse of SVB, a key player in the tech and venture capital community, leaves companies and wealthy individuals largely unsure of what will happen to their money.
According to press releases from regulators, the California Department of Financial Protection and Innovation closed SVB and named the FDIC as the receiver.
FDIC has in turn created the Deposit Insurance National Bank of Santa Clara, which now holds the insured deposits from SVB.
FDIC said in the announcement that insured depositors will have access to their deposits no later than Monday morning while SVB’s branch offices will also reopen at that time, under the control of the regulator.
According to the press release, SVB’s official checks will continue to clear.
The FDIC’s standard insurance covers up to $250,000 per depositor, per bank, for each account ownership category. The FDIC said uninsured depositors will get receivership certificates for their balances.
The regulator further added that, it will pay uninsured depositors an advanced dividend within the next week, with potential additional dividend payments as the regulator sells SVB’s assets.
Whether depositors with more than $250,000 ultimately get all their money back will be determined by the amount of money the regulator gets as it sells Silicon Valley assets or if another bank takes ownership of the remaining assets.
As of the end of last December, SVB had roughly $209 billion in total assets and $175.4 billion in total deposits, according to the press release. The FDIC said it was unclear what portion of such deposits were above the insurance limit.
The last US bank failure of this size was Washington Mutual in 2008, which had $307 billion in assets.
Writing by Tersoo Nicholas