Silicon Valley Bank’s collapse was the second-biggest bank failure in U.S. history in terms of assets. Deposits at the tech-focused lender’s parent,
had declined in three consecutive quarters and the situation worsened on March 9 when clients tried to withdraw $42 billion.
SVB Financial deposits, quarterly net change
Inflows turned
to outflows in the
past year as clients
burned cash amid
the tech slowdown.
$42 billion
in attempted
withdrawals
on March 9
Inflows turned
to outflows in the
past year as clients
burned cash amid
the tech slowdown.
$42 billion
in attempted
withdrawals
on March 9
Inflows turned
to outflows in the
past year as clients
burned cash amid
the tech slowdown.
$42 billion
in attempted
withdrawals
on March 9
Inflows turned
to outflows as
clients burned
cash amid the
tech slowdown.
$42 billion
in attempted
withdrawals
on March 9
Inflows turned
to outflows as
clients burned
cash amid the
tech slowdown.
$42 billion
in attempted
withdrawals
on March 9
The Federal Deposit Insurance Corp. took control of the bank, creating a new entity it called the Deposit Insurance National Bank of Santa Clara. All of the bank’s deposits have been transferred to the new bank, the regulator said.
Insured depositors will have access to their funds, the FDIC said. Depositors with funds exceeding insurance caps will get receivership certificates for their uninsured balances. The majority of SVB’s deposits are uninsured.
SVB was flooded with cash during the pandemic tech boom—startups and their investors were taking in huge sums, which swelled SVB’s coffers. SVB in turn used a lot of that money to buy Treasury bonds and mortgage-backed bonds.
But as interest rates rose, those securities declined in value.
That wasn’t a problem at first—SVB said it would never sell the lion’s share of those bonds—a designation that meant it could ignore any losses from the declining value. But in early March, it had to face up to the losses—the flood of withdrawal requests was more than it could satisfy by selling the bonds.
Write to Peter Santilli at peter.santilli@wsj.com and James Benedict at james.benedict@wsj.com
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