Authorities in the US state of California closed Silicon Valley Bank (SVB) on Friday after it failed to raise money by issuing new shares. As a result, the bank is no longer able to meet its obligations. The federal government agency FDIC was appointed as administrator.
SVB had taken out loans when interest rates were low, but because interest rates have risen sharply in recent months, the bank has had difficulty refinancing its loans. When customers tried to withdraw their deposits en masse, the California regulator decided to close the bank.
The Federal Deposit Insurance Corporation (FDIC), the organization that provides insurance to consumers, will open SVB’s headquarters and seventeen branches in California and Massachusetts on Monday. Customers can then access their funds again. Assets worth up to $250,000 (€235,000) are insured.
At the end of last year, SVB Bank managed assets worth more than $175 billion. This made it the sixteenth largest bank in the United States.
The last time a bank in the United States that was subject to the FDIC insurance system failed was in October 2020. That’s when Almena State Bank of Almena (Kansas) collapsed.
