Silicon Valley Bank: Regulators shut down US-based Silicon Valley Bank (SVB) following sudden shutdown of Silvergate Capital Corp and the indiscriminate fundraising of SVB. Startup industry stocks in the US is in deep shock in the US.
Startup-focused lender SVB Financial Group (SIVB.O) became the largest bank failure since the financial crisis on Friday, in a sudden collapse that roiled global markets and stranded billions of dollars belonging to companies and investors.
California banking regulators closed the bank on Friday and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for later disposition of its assets.
Bank to reopen on March 13
The main office and all branches of Silicon Valley Bank will reopen on March 13 and all insured depositors will have full access to their insured deposits no later than Monday morning, the FDIC said.
But 89% of the bank’s $175 billion in deposits were uninsured as the end of 2022, according to the FDIC, and their fate remains uncertain.
Companies like video game maker Roblox Corp RBLX.N and streaming device maker Roku Inc (ROKU.O) said they had hundreds of millions of deposits at the bank. Roku said its deposits with SVB were largely uninsured. Its shares plummeted 10% in extended trading.
Wages payment uncertain
Technology workers whose paychecks relied on the bank were also worried about getting their wages on Friday. An SVB branch in San Francisco showed a note taped to the door telling clients to call a toll-free telephone number.
The FDIC said it would seek to sell SVB’s assets and that future dividend payments may be made to uninsured depositors.
In the past, the FDIC has moved quickly and struck deals to sell major banks over the weekend.
SVB did not respond to calls for comment.
Startup community in shock
The startup community is in a shock as it saw the lender as a source of reliable capital. Customers could not enter the bank on Friday as the doors remained locked.
CEO of Cato Digital Dean Nelson said he was worried about the company’s ability to pay employees and cover expenses.
“Access to the cash is the biggest problem for the majority of the companies here. If you’re a startup, cash is king. The cash and the workflow, to be able to have the runway is critical.”
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