On Friday, March 10, 2023, news broke of the collapse of Silicon Valley Bank, the 16th largest bank in the United States with $213 billion in assets reported as of December 2022. Soon after, on Sunday, March 12, Signature Bank followed suit. As of Monday, March 13, the FDIC has taken over as the receiver for both banks, established two bridge banks, and transferred all insured and uninsured deposits.
Following the closures of Silicon Valley Bank and Signature Bank, many companies have questions about what happens next and potential impacts on their businesses. Jackson Walker has published a dedicated webpage, Insights & Resources on Bank Closings, featuring information that may be helpful to businesses dealing with the aftermath.
What You Need to Know
About SVB and Signature
- The FDIC has transferred all insured and uninsured deposits and substantially all assets of Silicon Valley Bank and Signature Bank to the FDIC-operated bridge banks. All Qualified Financial Contracts (as defined in 12 USC 1821(e)) have also been transferred to the bridge banks. As a result, account holders will continue to have access to their accounts and be made whole with respect to both insured and uninsured deposits. All direct deposits, including social security, payroll, veterans’ benefits, disability, unemployment, or any payment received electronically, will continue as usual.
- Account holders may withdraw funds from any transferred account without early withdrawal penalty until they enter into a new deposit agreement with Silicon Valley Bridge Bank, N.A. or Signature Bridge Bank, N.A.
- Shareholders of Silicon Valley Bank should contact the holding company, SVB Financial Group, directly for questions or to file a claim. As noted in the FDIC’s FAQ page for Silicon Valley Bank, the holding company owns all shares of Silicon Valley Bank stock and was not included in the closing of the bank or the resulting receivership. As of 4:15 p.m. on March 13, 2013, the FDIC has not issued similar guidance with regard to Signature Bank.
About the Security of the Banking System
- President Biden delivered remarks on the collapse of Silicon Valley Bank and Signature Bank. He noted that the FDIC has taken control of both banks’ assets, and all customers with deposits will be able to safely access their money. Biden also outlined steps the administration plans to take as a result of the closings.
- The Treasury Department, Federal Reserve, and FDIC issued a joint statement affirming that the U.S. banking system remains resilient and on a solid foundation, with reforms ensuring better safeguards for the banking industry.
- The Federal Reserve Board announced a new Bank Term Funding Program (BTFP) to provide an additional source of liquidity to U.S. depository institutions to eliminate the need to sell high-quality securities quickly in times of stress. The BTFP will offer loans of up to one year in length to any eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral.
Jackson Walker Can Help
Jackson Walker will be updating the Insights & Resources on Bank Closings webpage with further news regarding the recent bank closings, the impact of businesses in Texas and nationwide, and evolving regulatory responses. With decades of experience in banking, workouts, litigation, bankruptcy, asset liquidation and acquisition, FDIC receiverships, and more — as well as key involvement in the aftermath of the Texas banking meltdown of the 1980s and early 1990s — our attorneys have the institutional knowledge to help businesses mitigate losses and navigate financial recoveries. This experience includes counseling clients in the following areas:
- Financial Institutions and Third-Party Contractors — Asset Acquisition and Management, Pool Acquisition Financing, Workout and Loan Restructuring
- Bank Regulatory Matters – Receiverships — Government-Assisted Bank Transactions, Failed Bank Resolutions, and Banking Regulatory Issues
- Capital Markets & Commercial Transactions — Purchases and Sales of Assets, Debt and Equity Capital Raising Activities, Mergers and Acquisitions, Derivatives (Hedging) and Investments, Corporate Governance and Fiduciary Duty Concerns, and Complex Commercial Transactions
- Financial Institution Litigation — Special Asset and Lender Liability Cases, Bond and Loan Participation Disputes, Asset Disposition and Foreclosure
- Real Estate — Real Estate Financing, Acquisitions, and Dispositions
- Bankruptcy — Reorganizations and Liquidations
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