Silicon Valley Bank Crisis: Banking regulators close SVB to protect depositors

After America’s Silicon Valley Bank (SVB), one of the most prolific lenders in the private market ecosystem, resulted in a major crisis, California banking regulators on Friday closed SVB Financial Group (SIVB.O). The regulator has put the tech-heavy lender into receivership and will dispose of its assets, moving quickly to protect depositors as a crisis rippled through global markets and hit banking stocks.

Federal Deposit Insurance Corporation (FDIC) has been now appointed as the receiver, according to a statement.

Silicon Valley Bank is the first FDIC-insured institution to fail this year, the FDIC said. The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.Shares of SVB were halted on Friday after tumbling as much as 66 per cent in premarket trading.

SVB, which does business as Silicon Valley Bank, remained unavailable for comment. Earlier, SVB said that it was undergoing a series of conversations to determine next steps for the company, it wrote in a memo to employees Friday morning seen by Reuters.

“We request all employees work from home today and until further notice, except essential and branch employees. More information will be communicated as soon as it is available.”Treasury Secretary Janet Yellen told lawmakers on Capitol Hill Friday the department was aware of recent developments and was monitoring the situation, calling it “a matter of concern” when banks experience losses, according to CNBC.U.S. regulators were observed arriving at the bank’s California offices on Friday, Bloomberg News reported. 

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