U.S. government takes control of Silicon Valley Bank

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U.S. banking regulators on Friday assumed control of Silicon Valley Bank, the country's 16th largest bank and a top financial institution for technology and life sciences companies.

The big picture: This is the largest bank failure since Washington Mutual in 2008.

Details: Federal Deposit Insurance Corp. (FDIC) created a new bank into which all of SVB's deposits were transferred, and said that "all insured depositors will have full access to their insured deposits no later than Monday morning,"

  • One big caveat is that deposits only are insured to up to $250,000, so FDIC added that it "will pay uninsured depositors an advance dividend within the next week."
  • FDIC added that all of SVB's physical bank branches will reopen on Monday morning.

By the numbers: SVB had approximately $209 billion of total assets and $175 billion in deposits at year-end 2022, but the FDIC says its current deposit total is "undetermined."

  • SVB thus far has not quantified how much money walked out the door yesterday, after a $2.25 billion share sale plan sparked a run on the bank.

What to watch: A seemingly endless number of second-order effects, including:

  • Other banks may lend more cautiously, including SVB rivals that currently are swimming in new deposits.
  • The Fed could become more reluctant to keep pushing interest rates higher. On Friday, the market-priced odds decreased that the central bank will enact a super-sized half-point rate increase (although that also could be a reaction to the February jobs report).

Go deeper: Silicon Valley's burning bank

Editor's note: This is a breaking news story. Please check back for updates.

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