Federal regulators announced over the weekend that they will fully back all depositors of Silicon Valley Bank, guaranteeing that they are paid back in full after the bank collapsed last week.
The announcement late Sunday afternoon came from Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg.
“Depositors will have access to all of their money starting Monday, March 13,” the statement said. “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
The federal agencies also revealed that a second bank was closed in New York on Sunday by state officials.
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” the statement said. “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”
“Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed,” the statement continued. “Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”
SVB announced a $1.75 billion share sale on Wednesday after the company suffered heavy losses from the liquidation of a $21 billion bond portfolio, raising concerns among venture capital firms and startups with ties to the company about the safety of their assets. SVB, the 16th largest bank in the United States and the largest in Silicon Valley, lends to nearly half of publicly traded venture-backed technology and healthcare companies.
The Federal Deposit Insurance Corporation said on Friday that SVB was closed by the California Department of Financial Protection and Innovation.
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