Silicon Valley Bank had about $209 billion in whole belongings and about $175.4 billion in whole deposits, as of Dec. 31, 2022, a Reuters report stated.
The principal workplace and all branches of Silicon Valley Bank will reopen on March 13 and all insured depositors could have full entry to their insured deposits no later than Monday morning, based on the assertion.
“Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver,” said a statement from FDIC.
Also read: ETtech Explainer: how rising US interest rates caused a pincer movement on Silicon Valley Bank
The federal agency also said that it has created the Deposit Insurance National Bank of Santa Clara (DNIB). To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank, FDIC added.
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The startup-focused lender had 17 branches in California and Massachusetts.
Earlier, SVB Financial Group was exploring options, including a sale, after its efforts to raise capital through a stock sale failed.
Shares of SVB were halted on Friday after tumbling as much as 66% in premarket trading.
The crisis at SVB started earlier this week when the bank, which lends heavily to tech startups, launched a share sale to shore up its balance sheet after selling a portfolio consisting mostly of US Treasuries at a loss.
On Wednesday, the SVB Financial Group announced that it was raising $2.25 billion in a share sale in addition to having sold $21 billion worth of securities from its portfolio.
The financial institution additionally stated it booked a large after-tax lack of $1.8 billion on gross sales of those investments.
This led to solvency fears with the lender inflicting a ripple-effect into its prospects pulling out deposits.
According to a report by the Wall Street Journal, venture-capital buyers had suggested startups to drag their deposits from SVB. Other massive buyers together with Peter Thiel’s Founders Fund and Coatue Management additionally reportedly instructed their portfolio corporations to cut back their publicity to SVB.
Indian SaaS corporations on alert
The disaster at Silicon Valley Bank has rattled some Indian buyers and founders operating SaaS corporations with accounts on the lender.
As the financial institution’s inventory misplaced over 60% of its worth on Thursday, enterprise capital funds checked in with homegrown startups, particularly these headquartered within the US, about how a lot of their capital is held at SVB Financial Group.
While late-stage Indian-origin SaaS (software program as a service) corporations like Zenoti instructed ET that they moved out of SVB final 12 months, early-stage SaaS corporations do financial institution with the troubled lender. Saurabh Kumar, founder and CEO of early-stage agency Rezolve.ai, stated the corporate was maintaining a detailed watch on developments however is but to drag out all of the funds.
(With inputs from Reuters)
Source: economictimes.indiatimes.com