Silicon Valley Bank (SVB) has reportedly been closed down by regulatory authorities as a result of widespread client withdrawals, which caused the shares of the company to plummet by 60% on Thursday and 62% during premarket trading on Friday.
The Federal Deposit Insurance Corporation (FDIC) made the announcement that the California Department of Financial Protection and Innovation had closed the bank and appointed them as the receiver of the institution.
Deposits that were guaranteed by the FDIC were moved to the Deposit Insurance National Bank of Santa Clara when it was established by the FDIC as a measure to safeguard clients of the Santa Clara Valley Bank.
The Federal Deposit Insurance Corporation provided depositors with insurance of up to two hundred fifty thousand dollars per institution for their money.
On March 13, the DINB is going to reopen the offices of Silicon Valley Bank, and at that time, all banking operations will get back to normal.
According to CNBC, SVB was facing a quick outflow of client deposits after the bank disclosed a $1.8 billion loss on asset sales on Wednesday owing to rising interest rates.
The reason for the loss was the bank’s decision to sell assets at a reduced price.
On Thursday, prominent venture capital firms called on businesses to remove their deposits from the bank because of the precipitous drop in the stock price of the bank.
According to the information provided by the source, once the bank was unable to acquire further capital, it entered into discussions over the possibility of selling itself.
According to the FDIC, in December of 2022, SVB had a total asset value of $209.0 billion and a total deposit value of $175.4 billion.
The bank was the most significant financial institution in Silicon Valley and one of the most important financial institutions in the United States.
The incident at Silicon Valley Bank marks the largest and most significant bank failure in the U.S. since the financial crisis of 2008.