California: Banking crisis has come again in America. A California regulator has shut down a Silicon Valley bank in financial trouble. Along with this, the Federal Deposit Insurance Corporation ie FDIC has been appointed as the receiver.
California: Banking crisis has come again in America. A California regulator has shut down a Silicon Valley bank in financial trouble. Along with this, the Federal Deposit Insurance Corporation ie FDIC has been appointed as the receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
Silicon Valley Bank collapsed after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023, read FDIC statement.Earlier, the bank’s shares were halted for trading after falling 66% in pre-market trading.
The FDIC will pay the advance dividend to uninsured depositors within the next week. Uninsured depositors will receive a receipt certificate for the balance amount of their uninsured funds. As the FDIC sells Silicon Valley Bank’s assets, future dividends may be paid to uninsured depositors. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB).
At closing, the FDIC immediately transferred all of Silicon Valley Bank’s insured deposits to DINB as receiver.The Silicon Valley bank’s decline stemmed partly from the Federal Reserve’s aggressive interest rate hikes over the past year.After interest rates hovered near zero for years, the central bank launched a series of historic rate hikes last spring to make borrowing more expensive for businesses and individuals — in line with a cooling economy and inflation.
Silicon Valley Bank had 17 branches in California and Massachusetts. Silicon Valley Bank’s main office and all branches will reopen on Monday, March 13, 2023. DINB will maintain the normal business hours of Silicon Valley Bank. Banking activities including online banking and other services will resume from Monday, March 13. Official checks at Silicon Valley Bank will keep clearing.
As of December 31, 2022, Silicon Valley Bank had total assets of approximately $209 billion and total deposits of approximately $175.4 billion. Silicon Valley Bank’s main office and all branches will reopen on March 13 and all insured depositors will have full access to their insured deposits as of Monday morning. The startup-focused Silicon Valley bank has 17 branches in California and Massachusetts, according to the FDIC.
Let us tell you that this is the second time in about two and a half years that the FDIC insured bank has closed. Earlier in October 2020, Almena State Bank was also locked. The biggest crisis in the banking sector in America came in the year 2008. This year the banking firm Lehman Brothers declared itself bankrupt. After this, the worldwide recession including America had broken the back of the economy.
