money US regulators will protect all deposits at Silicon Valley Bank
All depositors, including companies like Etsy and Roku, will gain immediate access to their funds.
US regulators have announced that they're taking action to "fully" protect all deposits at Silicon Valley Bank (SVB), CNBC has reported. The institution is home to a large number of startups and established companies like Roku and Etsy, which will have full access to their funds as of today. At the same time, officials said there will be "no bailouts" and that shareholders and unsecured creditors won't be protected.
"Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system," the FDIC, Treasury Department and Federal Reserve said in a joint statement. "Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer."
In addition, HSBC UK agreed to purchase Silicon Valley Bank's UK division for a symbolic £1 to prevent the company's collapse in that region, the UK government announced. As in the US, both deposits and public funds are protected. "Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK," the press release states. "This ensures customer deposits are protected and can bank as normal, with no taxpayer support."
The FDIC took over SVB on Friday following the largest US bank collapse in nearly 15 years. There were concerns that numerous tech startups and companies wouldn't be able to make their payrolls, and Etsy said yesterday that payments to merchants may be delayed. On Friday, Roku announced that it could lose as much as 26 percent of its cash reserves, or more than $487 million, due to the collapse.
On top of SVB, Signature Banks was closed by regulators on the weekend. It's one of the largest banks used by cryptocurrency companies, as the Coinbase exchange, for one, had $240 million in deposits at the bank. In the same joint statement, federal regulators said that "all depositors of this institution will [also] be made whole."
Silvergate, another institution popular with crypto exchanges (and known for purchasing Diem, the ambitious crypto project funded by Facebook), collapsed on March 8th. That marks a run of three key banks with ties to technology firms closing in the space of a week.
To reassure depositors no doubt nervous over these events, the government said that it will make additional funding available to other eligible institutions. The new program will allow banks to put up treasuries and other safe government securities as collateral in return for central bank loans of up to one year. It's designed to fix a key issue that led to SVB’s failure: unrealized losses on government securities caused by rapidly rising interest rates.
"The U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry," the joint statement reads. "Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe."
Update March 13, 2023 at 4:18 AM ET: The post has been updated to include news that HSBC UK has purchased Silicon Valley Bank UK and that UK deposits and taxpayers will be fully protected.
