- The reason for the closure was called “insufficient liquidity and insolvency”
- A few hours before closing, the bank was looking for a buyer
- Venture investors recommended withdrawing funds from SVB
- SVB was the 16th largest bank in the US and has been in business for over 40 years
California regulators all of a sudden closed Silicon Valley Bank. This is not the first bank to announce its closure. Silvergate recently shut down operations and liquidated its banking division.
The services of Silicon Valley Bank were mainly used by hedge funds and venture capital firms. Companies like Blockchain Capital, Castle Island Ventures, Dragonfly, and Pantera have been on good terms with the bank, CoinDesk reports.
Although banking activity at 17 SVB branches is closed today, operations will resume on Monday under the supervision of the FDIC. The main priority of the Federal Deposit Insurance Corporation is to provide clients with access to their deposits. All depositors will receive “full access” to insured deposits no later than Monday morning. Uninsured depositors will receive an upfront dividend within the next week.
Earlier this week, top management of Silicon Valley Bank announced an additional issue of shares for $1.75 billion, allegedly necessary in order to strengthen the bank’s balance sheet. Investors accused the company of insolvency. Panic ensued, sending the share price down more than 60% as the bank faced a run on funds.
At the time, SVB CEO Greg Becker said the assets were safe and that the sale of the shares was announced as an attempt to increase the bank’s financial flexibility, strength and profitability. Becker said the bank has sufficient liquidity to support its clients. He asked the bank’s customers to remain calm:
“We’ve been supporting you for a long time, the last thing we need is for you to panic,” Becker said.
