The U.S. Federal Deposit Insurance Corporation (FDIC) has announced that clients of Silicon Valley Bank (SVB) and Signature Bank (SBNY) can access their funds during normal banking hours on Monday, March 13, 2023. The FDIC stated that both banks’ deposits were made whole under the “systemic risk exception” approved by the U.S. Federal Reserve and Treasury Department.
Details on the Creation of Full-Service FDIC-Operated Bridge Banks
Customers who utilized Silicon Valley Bank (SVB) and Signature Bank (SBNY) will have access to their funds on Monday, following the FDIC’s actions to transform both banks into newly created full-service FDIC-operated bridge banks. SVB will now be known as “Silicon Valley Bank N.A.,” while Signature’s new name is “Signature Bridge Bank N.A.” Both bridge banks are chartered national banks operated by the FDIC with the goal of stabilizing the institutions and implementing an orderly resolution.
Regarding both U.S. banks, depositors and borrowers will be able to use ATMs, debit cards, online banking, and write checks as they could before the bank failures. The FDIC is advising loan customers to “continue making loan payments as usual.” While Silicon Valley Bank, or SVB, was the second-largest bank failure in the United States after the Washington Mutual (Wamu) collapse in 2008, New York’s Signature Bank was the third-largest U.S. banking failure. While there is a great deal of information concerning why SVB failed, there is very little information being provided on why Signature failed.
It has been reported that Signature posed a “systemic risk,” and New York regulators shut down the bank “pursuant to Section 606 of New York Banking Law, in order to protect depositors.” Section 606, however, deals with obtaining approval from New York to relocate or close the bank while ensuring that depositors still have access to their funds. Signature will operate to maximize the eventual sale of the bank, and the FDIC named Greg Carmichael as CEO of Signature Bridge Bank, N.A. Additionally, the U.S. banking entity appointed Tim Mayopoulos as CEO of Silicon Valley Bank, N.A.
Furthermore, the banking giant HSBC (LSE: HSBA) agreed to purchase Silicon Valley Bank’s U.K. subsidiary for £1. “This acquisition makes excellent strategic sense for our business in the U.K.,” HSBC Chief Executive Noel Quinn said in a statement.
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