Regulators are working tirelessly to mitigate the fallout from the recent collapse of SVB, the largest U.S. bank to fail in over a decade. The bank, trendy among tech companies and start-ups, closed its doors on Friday following a bank run. The collapse has sent shockwaves through the tech industry, leaving many of the bank’s business clients desperate to access their funds to keep their operations running and their employees paid.
FDIC to Oversee Emergency Breakup of SVB Financial Group
To address the urgent needs of Silicon Valley Bank’s clients, the Federal Deposit Insurance Corporation (FDIC) has stepped in as the bank’s receiver. According to a report by Bloomberg, regulators aim to make 30% to 50% of uninsured deposits available for withdrawal on Monday. While the FDIC insures deposits of up to $250,000, most of the funds held at Silicon Valley Bank far exceeded that limit.
USDC Issuer Circle Among Companies Affected
The collapse of Silicon Valley Bank has impacted a range of companies, including USDC issuer Circle, which has $3.3 billion of its cash reserves for the stablecoin stuck at the bank. The FDIC is racing to sell assets and make a portion of clients’ uninsured deposits available as soon as Monday. The initial payout, whose amount is still being determined, would aim to tide over the firm’s distressed customers, many of them Silicon Valley entrepreneurs and their companies, with more cash to follow as the bank’s assets are sold.
Senior Wall Street Executives Calculate Value of Bank Holdings
Behind the scenes, senior Wall Street executives are working to assess the value of the bank’s holdings and the amount of cash that could be extracted quickly without a bailout or deal to sell all or part of the bank to a more vital institution. According to anonymous sources cited by Bloomberg, figures being floated for an initial payment range from 30% to 50% or more of uninsured deposits.
Uninsured Depositors to Receive Advance Dividend Soon
The FDIC has assured the public that 100% of protected deposits will be made available on Monday, with an advance dividend to uninsured depositors soon to follow. However, it remains to be seen how much of their uninsured deposits will be made available on Monday and how much more cash will follow in the coming days and weeks. For now, regulators are working tirelessly to address the needs of Silicon Valley Bank’s clients and mitigate the fallout from the bank’s collapse.
