Does Silicon Valley Bank exist? (2024)

Does Silicon Valley Bank exist?

Silicon Valley Bank, which catered to the tech industry for three decades, collapsed on March 10, 2023, after the Santa Clara, California-based lender suffered from an old-fashioned bank run. State regulators seized the bank and made the Federal Deposit Insurance Corporation its receiver.

The collapse happened for multiple reasons, including a lack of diversification and a classic bank run, where many customers withdrew their deposits simultaneously due to fears of the bank's solvency. Many of SVB's depositors were startup companies.

SVB ran into trouble because too many of its customers' funds were locked into bonds. That became a problem when depositors — mostly startups and other tech companies — needed to withdraw more money as other sources of funding dried up.

Employees rate Silicon Valley Bank 4.2 out of 5 stars based on 1,236 anonymous reviews on Glassdoor. In 2022, Silicon Valley Bank employees have voted their company to be one of Glassdoor's Best Places to Work.

On Friday, March 10, 2023, Silicon Valley Bank, Santa Clara, CA was closed by the California Department of Financial Protection & Innovation and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

It's under new management, and now owned by North Carolina-based First Citizens Bank, which bought its deposits and branches out of bankruptcy weeks after SVB crumbled in March 2023.

Over a period of just two days in March 2023, the bank went from solvent to broke as depositors rushed to SVB to withdraw their funds, resulting in federal regulators closing the bank for good on March 10, 2023. SVB's collapse marked the second largest bank failure in U.S. history after Washington Mutual's in 2008.

By the close of business that day, customers had withdrawn $42 billion, leaving the bank with a negative cash balance of about $958 million. Among the financial services companies receiving money from SVB customers were Brex, JPMorgan Chase, Morgan Stanley and First Republic Bank.

As startup clients withdrew deposits to keep their companies afloat in a chilly environment for IPOs and private fundraising, SVB found itself short on capital. It had been forced to sell all of its available-for-sale bonds at a $1.8 billion loss, the bank said late Wednesday.

The Collapse Goes Public

Following federal intervention on March 8, Silicon Valley Bank (SVB) was closed down by California's financial regulator on March 10.

Can banks seize your money if economy fails?

Generally, money kept in a bank account is safe—even during a recession. However, depending on factors such as your balance amount and the type of account, your money might not be completely protected. For instance, Silicon Valley Bank likely had billions of dollars in uninsured deposits at the time of its collapse.

One of the most immediate effects of the collapse of SVB is the disruption of the financial services that the bank provides to its clients. Many of the world's leading technology companies relied on SVB for essential financial services such as lending, cash management, and investment banking.

Is Silicon Valley Bank a good company to work for? Silicon Valley Bank has an overall rating of 4.2 out of 5, based on over 1,418 reviews left anonymously by employees. 76% of employees would recommend working at Silicon Valley Bank to a friend and 49% have a positive outlook for the business.

Unlike other banks, SVB is great at being tailored to a startup's needs, especially at the early stage. Companies that make life easy for founders is key. SVB does this with easy remote banking. Another thing SVB does really, really well is quickly build trust with founders.

Elon Musk is open to the idea of buying the Silicon Valley Bank, he said in a Twitter post. It all started when Razer CEO Min-Liang Tan suggested that Twitter should consider buying SVB and turning it into a digital bank. Musk responded to the tweet by saying, "I'm open to the idea."

As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors. Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023.

MORE: US government seized the assets of two failing banks

But now, as Hogan puts it, the government is not coming to save SVB or Signature Bank - noting that all the money is going towards depositors, not the banks. “But [the government] is not going to let the depositors get hurt,” says Hogan.

SVB was shut down and taken over by the U.S. government after a slew of startups and venture capitalists withdrew their money en masse amid fears over its financial health. “They didn't hedge the interest rate,” Glover said.

Most of the cost will likely be covered by proceeds the Federal Deposit Insurance Corp. receives from winding down the two banks. Any costs beyond that would be paid for out of the FDIC's deposit insurance fund.

Was Silicon Valley Bank FDIC insured?

On Sunday, March 26, 2023, the Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, N.A., with First-Citizens Bank & Trust Company, Raleigh, NC.

Impact on Depositors and Investors

21 In other words, if you had $250,000 in a Silicon Valley Bank account, you would get all of your money back. Unfortunately, most of the accounts in Silicon Valley Bank held more than $250,000 of deposits, meaning most of the funds were uninsured.

The collapse of Silicon Valley Bank prompted the US government to roll out the biggest rescue package since the 2008 financial crisis. On Sunday, the US Treasury, Federal Reserve, and Federal Deposit Insurance Corporation said in a joint statement that all depositors of SVB would be made whole on Monday.

To be sure, SVB was allowed to fail and shareholders are projected to lose $850 million collectively. But both insured depositors — with up to $250,000 in the bank — and uninsured depositors will not lose money.

The largest bank failure ever occurred when Washington Mutual Bank went under in 2008. At the time, it had about $307 billion in assets. During the uncertainty of the banking crisis, however, Washington Mutual experienced a bank run where customers withdrew almost $17 billion in assets in less than 10 days.