The US government has said that people and businesses who have money deposited with failed US bank Silicon Valley Bank (SVB) will be able to access all their cash from Monday.
A statement from the US Treasury, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said depositors would be fully protected. The statement said taxpayers would not bear any losses from the move.
SVB was shut down by regulators who seized its assets on Friday. It was the largest failure of a US bank since the financial crisis in 2008.
“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” the statement says.
It also announced “a similar systemic risk exception for Signature Bank, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”
The statement also reassures the public about the US banking system: “The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry.
“Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
Silicon Valley Bank had lost $1.8 billion
The crisis was triggered by a Thursday announcement that SVB had lost $1.8 billion after selling securities worth $21 billion to hedge against a challenging market, Forbes explains.
Then the shares of SVB Financial Group started to suffer losses of around 60% on two consecutive days until sales were eventually halted.
Market insiders have expressed concerns about the potential consequences of SVB’s closure on the stock market and banking sector.
SVB, which ranked as the 16th biggest bank in the U.S. at the end of last year, operated 17 branches in California and Massachusetts, all of which will reopen on Monday, March 13, during their normal business hours. Online banking and other services will also resume, while SVB’s official checks will continue to clear.
As of December 31, 2022, SVB had approximately $209 billion in total assets and $175.4 billion in total deposits.
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