China News Service, New York, March 10 (Reporter Wang Fan) The Federal Deposit Insurance Corporation (FDIC) said on the 10th that Silicon Valley Bank has been closed by the California state regulator due to insolvency and taken over by the company.
On the same day, the stock of Silicon Valley Financial Group, the parent company of Silicon Valley Bank, plummeted in pre-market trading, and then entered a suspension state.
The Federal Deposit Insurance Corporation said in a statement that Silicon Valley Bank had been closed by the California Bureau of Financial Protection and Innovation (DFPI) on the 10th, which designated the Federal Deposit Insurance Corporation as a receiver.
While Silicon Valley Bank is closed, the FDIC will transfer all insured deposits to the newly created Santa Clara Deposit Insurance National Bank (DINB).
No later than the morning of the 13th, all insured depositors will be able to fully use their insured deposits.
An independent agency created by Congress, the FDIC insures each account up to $250,000.
Silicon Valley Bank had about $209 billion in total assets and about $175.4 billion in deposits at the end of last year, the agency said, though it was unclear how much of those deposits were above the insurance limit.
Depositors with funds above the insured cap will be issued a receivership certificate for the uninsured balance.
According to the US Consumer News and Business Channel (CNBC), due to insufficient liquidity, Silicon Valley Bank announced on the 9th that it plans to raise more than US$2 billion in additional funds by selling common and preferred shares.
As soon as the news came out, the stock of its parent company Silicon Valley Financial Group plummeted more than 60% in one trading day.
In the pre-market trading on the 10th, the stock of Silicon Valley Financial Group plummeted again, with a drop of 68%, and then entered a suspension state.
The tech-focused Silicon Valley Bank is the 16th largest U.S. bank, the largest U.S. bank to fail after the 2008 financial crisis, the Wall Street Journal said.
The bank has been hit hard since the Federal Reserve started raising interest rates last year.
Currently, the collapse of Silicon Valley Bank is dragging down the entire banking industry.
In terms of the stock market, after experiencing the worst single-day performance in nearly three years on the 9th, the U.S. bank stock index continued to fall on the 10th, and many bank stocks were suspended due to excessive volatility.
U.S. Treasury Secretary Yellen said at a congressional hearing on the 10th that she is "closely monitoring" developments at several banks.
Democratic Representative Swalwell said on the same day that he is working with other California legislators to find a solution to the Silicon Valley Bank crisis. "We must ensure that all deposits exceeding the $250,000 insurance limit are honored." If depositors lose confidence in the safety of their deposits, " Then we'll be in trouble."
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