U.S. authorities have closed Silicon Valley Bank, a favorite among start-up technology companies, following sudden and significant financial losses. The bank's parent company announced that it is seeking to raise over two billion dollars after incurring substantial losses from a large portfolio of bonds it sold.
A statement indicated that the regulatory body has assigned judicial control of the bank to the Federal Deposit Insurance Corporation, which will manage its assets. The agency noted that Silicon Valley Bank, the name used by the SVB group in its operations, is the first insured entity to fail this year. The last entity closed under the insurance of the agency was Almena State Bank in Kansas on October 23, 2020.
The statement added that the main office and all branches of Silicon Valley Bank are scheduled to reopen on March 13, and all insured depositors will have full access to their deposits by Monday morning at the latest. Employees in the technology sector who rely on the bank for their salaries expressed concern about receiving their pay today. At one SVB branch in San Francisco, a sign was posted instructing customers to call a toll-free number.
Immediate comment from SVB was not available. The Federal Deposit Insurance Corporation stated it would seek to sell SVB's assets and that cash future dividends may be distributed to uninsured depositors.
Bloomberg reported a decline in U.S. bank stocks following Silicon Valley Bank's rush to raise funds and the sudden closure of Silvergate Capital Corp.
