- Silicon Valley Bank faced shut down by the California Department of Financial Protection and Innovation, halting insured depositors’ access to their funds.
- Earlier this week, crypto-focused Silvergate Bank also announced plans to wind down and liquidate.
- The impact of Silicon Valley Bank’s collapse can be seen in the financial sector, with the First Republic Bank halted again after falling by 35%
The financial sector is taking one of the worst hits it has in the last couple of years, bringing down two banks in the same week. The impact of the crypto-focused Silvergate Bank’s collapse has been such that another bank was closed down on Friday, with another nearing the conditions which could result in its shuttering as well.
Silicon Valley Bank goes down
Silicon Valley Bank, in the later hours of Friday, was closed down by the California Department of Financial Protection and Innovation (DFPI). The department took possession of the bank, citing inadequate liquidity and insolvency. The DFPI additionally appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver of the bank.
At the time of the announcement, the FDIC stated that access to the insured deposits had been halted and that depositors would be able to access it by March 13. Discussing the banks’ financial condition, the FDIC noted,
“As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.”
The Silicon Valley Bank became the first FDIC-insured bank in two years to fail and also the second bank to fail this week.
Back on Wednesday, the crypto-focused bank Silvergate Bank had also announced that it would be winding down and voluntarily liquidiating. Silvergate, unlike the other banks, was already in the process of failing following the FTX collapse in November 2022.
Consequently, the entirety of the banking sector took a hit following the collapse of these two banks this week.
The financial sector struggles to minimize losses
As noted on the banking index, most of the banks could be seen trading in the red, with some such, as the Western alliance Bancorporation declining by nearly 42%. Similarly, the First Republic Bank also halted on Friday following a nearly 35% drawdown in the span of a day.
First Republic Bank opened at $69.50 before declining by almost 35.25%. Currently, changing hands at $75.39.
FRC 1-day chart
As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the number of deposits in excess of the insurance limits was undetermined. The number of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
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