SVB depositors will have access to all their money on Monday

SILICON Valley Bank’s (SVB) customers will be able to access all their money Monday (Mar 13) — both insured and uninsured deposits — in a major relief for wide swathes of the tech industry that had made SVB their go-to bank.

“Depositors will have access to all of their money starting Monday, Mar 13,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said in a joint statement on Sunday. “No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

Shareholders and certain unsecured debtholders won’t be protected, according to the statement.

Regulators seized the Santa Clara, California-based company last week and put it into receivership, marking the biggest failure of a US bank since 2008. The move came after a frenetic two days in which SVB’s long-established customer base of tech startups yanked deposits and it was forced to abandon efforts to raise fresh capital through an equity offering.

Federal officials’ actions “have calmed nerves, and had profoundly positive impacts on California — on our small businesses that can now make payroll, workers who will get their paychecks, on affordable housing projects that can continue construction, and on nonprofits that can keep their doors open tomorrow”. California governor Gavin Newsom said in a statement.

The FDIC requested bids from potential buyers of SVB’s business, but the regulators decided to move quickly to provide assurance to depositors that they will have access to their money by Monday, a Treasury official said, while declining to comment on the current state of the auction.

SEE ALSO

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The regulators’ actions were designed to reduce spillover effects from the depositor outflows, according to a senior Treasury official, who said the combination of measures announced Sunday should reduce depositor runs on solvent institutions.

SVB’s significant investment portfolio and high share of uninsured depositors is an unusual combination and not how many regional banks operate, according to a senior Treasury official. Regulators will revisit whether the right safeguards are in place, but right now they are focused on addressing the current situation, the official said. BLOOMBERG