- Silicon Valley Bank was closed by the California Department of Financial Protection.
- Trading for several regional banks—including crypto-friendly Signature Bank—was halted after their stocks experienced severe volatility.
- Silicon Valley Bank announced on Wednesday that it had taken extraordinary steps to shore up its finances.
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Silicon Valley Bank, the 18th largest bank in the U.S. by total assets, was closed down by regulators today after it suffered a bank run.
Biggest Bank Failure Since the Great Recession
The banking sector is taking a hit.
Early on Friday, the California Department of Financial Protection and Innovation announced the closure of Silicon Valley Bank. All FDIC-insured deposits were transferred from SVB to the Deposit Insurance National Bank of Santa Clara. The FDIC indicated that all insured depositors would have full access to their insured deposits by March 13, while uninsured depositors would receive certificates for the amounts of their uninsured funds.
Trading for several regional bank stocks—including SVB, Signature Bank, First Republic Bank, PacWest Bancorp, and Western Alliance Bancorp—had already been halted following the news of Silicon Valley Bank’s liquidity issues.
At the time of writing, SVB was down 67% on the weekly, Signature Bank 27%, First Republic 30%, PacWest Bancorp 37%, and Western Alliance by 29%.
Silicon Valley Bank unexpectedly announced on Wednesday that it was taking extraordinary and immediate steps to shore up its finances. The bank disclosed that it had sold off $21 billion of its most liquid assets, borrowed $15 billion, and attempted to raise cash by organizing an emergency sale of its stock.
The news sparked a wave of withdrawals Thursday as tech startups—which compose the overwhelming majority of the bank’s customers—sought to move their funds to a safer place. According to CNBC, SVB Financial (Silicon Valley Bank’s parent company), having failed to raise sufficient capital to shore up its operations, then began seeking to sell itself. At the time of its closure, Silicon Valley Bank was the 18th largest bank in the U.S. by total assets.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.