Silicon Valley Bank collapsed into Federal Deposit Insurance Corp. receivership on Friday, after its long-established customer base of tech startups grew worried and yanked deposits.
The California Department of Financial Protection and Innovation in a statement Friday said it has taken possession of Silicon Valley Bank and appointed the FDIC as receiver, citing inadequate liquidity and insolvency.
The FDIC said that insured depositors would have access to their funds by no later than Monday morning. Uninsured depositors will get a receivership certificate for the remaining amount of their uninsured funds, the regulator said, adding that it doesn’t yet know the amount.
Receivership typically means a bank’s deposits will be assumed by another, healthy bank or the FDIC will pay depositors up to the insured limit.
Problems mounted for the bank in March after Peter Thiel’s Founders Fund and other high-profile venture capital firms advised their portfolio companies to pull money from the bank. That advice came a day after SVB Financial Group, the bank’s parent company, announced it would try to raise more than $2 billion following a significant loss on its portfolio.
SVB was founded in 1983 over a poker game between Bill Biggerstaff and Robert Medearis, according to a statement from the bank’s 20th anniversary. Since its start, the firm has specialized in providing financial services to tech startups.
The bank had about $209 billion in total assets and about $175.4 billion in total deposits at the end of last year, the FDIC said. “At the time of closing, the amount of deposits in excess of the insurance limits was undetermined,” the regulator said.
— By Amelia Pollard (Bloomberg)