California banking regulators on Friday moved quickly to close startup-focused lender Silicon Valley Banks Financial Group , the largest bank failure since the financial crisis, a sudden collapse that prompted the global banking sector to shed billions in market value.
The regulator appointed the Federal Deposit Insurance Corporation (FDIC) as receiver, putting the tech-heavy lender into receivership and will dispose of its assets, according to a statement.
Silicon Valley Bank is the first FDIC-insured institution to fail this year, the FDIC said. The last FDIC-insured institution to close was Almena State Bank in Kansas, on October 23, 2020.
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, according to the FDIC statement.
Technology workers whose paychecks relied on the bank were worried about getting paid on Friday. An SVB branch in San Francisco showed a Scotch-taped note telling clients to call a toll-free telephone number.
SVB, which does business as Silicon Valley Bank, was not immediately available for comment. Its customers were met with locked doors on Friday.
Dean Nelson, CEO of Cato Digital, was on a line outside of SVB Santa Clara headquarters, hoping to get answers. “If you’re all here and things are locked up, it’s very difficult to operate your company,” he said. “But they just came out to tell us the bank is shut down.”
“Silicon Valley Bank is shedding light on vulnerabilities across the US banking sector, primarily in the bond holdings that many large institutions hold,” said Karl Schamotta, Chief Market Strategist at Corpay.
