The Federal Deposit Insurance Corp. (FDIC) said Monday it has transferred all deposits, both insured and uninsured, of the former Silicon Valley Bank to a newly created, full-service FDIC-operated “bridge bank” in an action that seeks to protect all depositors of the bank.
The move comes after the regulator closed the bank and its 13 branches on Friday and placed them in receivership, after a run on the bank that was triggered by concerns about the parent SVB Financial Group’s
bond portfolio and the need to raise capital. It was the second biggest U.S. bank failure ever, after the collapse of Washington Mutual during the 2008 financial crisis.
The FDIC said depositors will have full access to their money starting Monday morning when the bridge bank, called Silicon Valley Bank N.A., opens and resumes regular activity, including online banking.
“The transfer of all the deposits was completed under the systemic risk exception approved yesterday. All depositors of the institution will be made whole,” the FDIC said in a statement.
It named Tim Mayopoulos, a former president and CEO of the Federal National Mortgage Association, or Fannie Mae, as CEO of Silicon Valley Bank N.A. Mayopoulos was most recently president of Blend Labs Inc.
The news comes after the Federal Reserve on Sunday announced a new emergency loan program to bolster the capacity of the banking system in the wake of the collapse of Silicon Valley Bank.
Many banks have a similar profile to Silicon Valley Bank with bonds that has lost value as the Fed has sharply raised interest rates.
See now: 20 banks that are sitting on huge potential securities losses—as was SVB
Under the new program, banks and other lenders will be able to pledge Treasurys and mortgage-backed securities for cash. Banks can pledge collateral at par, or face value, rather than marking the assets to their current market value.
Also see: Silicon Valley Bank depositors will get ‘all of their money,’ regulators say
The Fed program also comes after the failure of Silvergate Capital last week. On Sunday, crypto-friendly Signature Bank was shut down by regulators.
Fears about other banks were clear early Monday in the nearly 69% slump in the stock of First Republic Bank
which came even after the Fed’s action. First Republic said it has access to more than $70 billion in unused liquidity after new support from the Federal Reserve and from JPMorgan Chase & Co.
in a deal struck over the weekend.
“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” First Republic founder and Executive Chairman Jim Herbert and Chief Executive Mike Roffler said in a joint statement Sunday.
Other early bank movers include PacWest Bancorp.
down 40%, and Western Alliance Bancorp.
In Europe, Credit Suisse stock hit a fresh record low, falling as much as 15% as investors continued to hammer away at the stock of the Swiss banking giant after the collapse of banks in the U.S.