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Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits

Andrey Rudakov | Bloomberg | Getty Images

Silicon Valley Bank has been closed by regulators, which have taken control of the bank’s deposits, the Federal Deposit Insurance Corporation announced Friday.

The California Department of Financial protection and Innovation closed SVB, and named theFDIC as the receiver. The FDIC in turn has created the Deposit Insurance National Bank of Santa Clara, which now holds the insured deposits from SVB.

The FDIC said in the announcement that insured depositors will have access to their deposits no later than Monday morning. SVB’s branch offices will also reopen at that time.

The FDIC’s standard insurance covers up to $250,000 per depositor, per bank. It is unclear exactly how larger accounts or credit lines for companies will be impacted by the closure. The FDIC said it will pay uninsured depositors an advanced dividend within the next week.

The move represents a rapid a downfall for SVB. On Wednesday, the bank announced that it was looking to raise more than $2 billion in additional capital after suffering a $1.8 billion loss on asset sales.

The shares of parent company SVB Financial Group fell 60% on Thursday, and dropped another 60% in premarket trading on Friday before being halted.

CNBC’s David Faber reported that the efforts to raise capital had failed and that SVB had pivoted toward a potential sale. However, a rapid outflow of deposits was complicating the sales process.

This is breaking news. Please check back for updates.

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