FDIC transfers deposits, assets of failed Silicon Valley Bank to 'bridge bank'

The Federal Deposit Insurance Corp. transferred all insured and uninsured deposits and substantially all assets of Santa Clara, Calif.-based Silicon Valley Bank, the failed banking subsidiary of SVB Financial Group, to a newly created FDIC-operated "bridge bank."

The California Department of Financial Protection and Innovation took possession of Silicon Valley Bank March 10 due to inadequate liquidity and insolvency and appointed the FDIC as the receiver.

Depositors now have full access to their money after Silicon Valley Bank NA — the bridge bank — opened and resumed normal banking hours and activities, including online banking, on March 13, the FDIC said in a news release.

Depositors and borrowers automatically became customers of the bridge bank and have customer service and access to their funds by ATM, debit cards and writing checks in the same manner as before. Silicon Valley Bank's official checks will continue to clear, and loan customers should continue making loan payments as usual, according to the FDIC.

The transfer of all the deposits was completed under the systemic risk exception approved March 12. All depositors of the bank will be made whole, and no losses associated with the resolution of Silicon Valley Bank will be borne by taxpayers, the FDIC said. Shareholders and certain unsecured debt holders will not be protected, and senior management has been removed, according to the agency.

Additionally, any losses to the Deposit Insurance Fund, or DIF, to support uninsured depositors will be recovered by a special assessment on banks, as required by law, the FDIC said.

The receiver for Silicon Valley Bank has also transferred all Qualified Financial Contracts of the failed bank to the bridge bank.

"These actions will protect depositors and preserve the value of the assets and operations of Silicon Valley Bank, which may improve recoveries for creditors and the DIF," the release said.

The FDIC appointed Tim Mayopoulos CEO of Silicon Valley Bank NA. Mayopoulos was president and CEO of Fannie Mae and most recently worked as president of Blend Labs Inc.