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- Regulators shut down Silicon Valley Bank, putting it into FDIC receivership.
- Trading was halted for the bank prior to the announcement.
- “At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.”
The California Department of Financial Protection and Innovation shut Silicon Valley Bank on Friday, the regulator said in a statement, capping off a rapid collapse for the firm.
“To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank,” the regulator said in a statement.
Shares of the Santa Clara-based financial firm crashed 87% over two days as fears of a bank run escalated this week. Early Friday, trading was halted for the stock, and according to CNBC, SVB had failed to raise fresh capital and was seeking a sale.
The crisis dragged on other bank stocks including JPMorgan, Bank of America, and Wells Fargo. Regional lenders, too, like First Republic, Signature Bank, and PacWest also sold off.
In a Friday note, Bank of America strategists said the sector-wide tumult points to the realization among investors that a higher interest rate environment is negative for earnings.
They also said, however, that there may be some overreaction at play.
“We believe that the sharp sell-off in bank stocks yesterday (large-cap bank index -7.7% vs. -1.7% S&P 500) was likely overdone as investors extrapolated idiosyncratic issues at individual banks to the broader banking sector,” the strategists wrote.
