On Friday, US regulators announced the shutdown of the Silicon Valley Bank (SVB) and seized all its assets. The move, which makes SVB the largest retail bank to fail since 2008, roiled global markets and stranded billions of dollars belonging to companies and investors.
Amid this chaos, Razer CEO Min-Liang Tan suggested that Twitter should consider buying SVB and turning it into a digital bank. Interestingly, Twitter chief Elon Musk responded to his tweet, saying, “I’m open to the idea”.
I think Twitter should buy SVB and become a digital bank.
— Min-Liang Tan (@minliangtan) March 11, 2023
Startup-focused lender SVB was shut down by regulators a day after its stock price plummeted by 60%.
It all started after SVB on Thursday announced a stock offering and offloaded securities to raise much-needed cash as it struggled with falling deposits. In reaction, the firm’s shares collapsed 60% in New York and trading was suspended before regulators announced they had closed the bank.
The closure was issued by the California Department of Financial Protection and Innovation, which also named the Federal Deposit Insurance Corporation (FDIC) as the receiver.
SVB’s chief Greg Becker in a video message told the employees, “he is working with banking regulators to find a partner for the bank”. There is “no guarantee” that a deal will be struck, he added.
Notably, Silicon Valley Bank was the United States’ 16th largest bank, with a total of 17 branches in California and Massachusetts. At the close of business on March 9, the bank had a negative cash balance of $958 million, according to an order taking possession of the bank filed Friday by California’s bank regulator, the Department of Financial Protection and Innovation.
Silicon Valley Bank Collapse: What Happens To Customers’ Deposits, Loans?
Just as stated earlier, the collapse of the Silicon Valley Bank, a key lender to US startups since the 1980s, has sent shockwaves in global markets. It is not only the largest bank failure since 2008, but also the second-largest failure ever for a retail bank in the United States.
Nearly $175 billion of the bank’s customer deposits are now under the control of the Federal Deposit Insurance Corporation, or FDIC, which has assured the depositors full access to their insured deposits after all the branches of the bank open on Monday morning. The financial body also said that cheques of the old bank would also be honoured.
If you had a deposit account
All depositors will have full access to their insured deposits from Monday. The FDIC also assured that uninsured depositors will be paid an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.
If you had a loan
As receiver, the FDIC will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.
If you are owed money for service or product provided
Customers are eligible to file a claim against Silicon Valley Bank for settlement of money owed for service or product provided. Those who were not paid for services rendered prior to March 10 will need to refer to the Receiver online or by mail.
Known for lending money to some of the biggest technology startups, SVB was the 16th largest US bank by assets: at the end of 2022, it had $209 billion in assets and approximately $175.4 billion in deposits.
The bank’s collapse is not only the largest bank failure since Washington Mutual in 2008, but also the second largest failure ever for a retail bank in the United States.
