On March 13, 2023, the FDIC announced that substantially all of the assets of Silicon Valley Bank have been transferred to a “bridge bank,” which is a newly chartered bank operated by a board appointed by the FDIC. This transfer included all the deposits, both insured and uninsured. Depositors will automatically become customers of the bridge bank and, beginning this morning, depositors will have full access to their funds by ATM, debit card, checks, and online banking. This move followed the March 10, 2023, receivership imposed on Silicon Valley Bank.
The transfer to the new bridge bank also included “qualified financial contracts,” which includes securities contracts, commodity contracts, forward contracts, repurchase agreements, swap agreements, and similar agreements determined by regulation, resolution, or order to be a qualified financial contract. 12 USC § 1821 (e)(8)(D)(i).
Senior management of Silicon Valley Bank will or have already lost their positions within the bank, the White House announced. Additionally, shareholders will not be rescued and are very unlikely to receive anything for their shares.
Although the FDIC has stated that insured and uninsured deposits will become available today, today’s announcement is silent about the future of the many bank loan commitments that were made to businesses for their ordinary business funding needs. These businesses, as of today, cannot access loans from Silicon Valley Bank, and may need to seek another source of liquidity to fund operations.
A link to the related release from the FDIC is here.
Please reach out to members of the Bank Receivership Task Force or to your Foley relationship partner if we can provide assistance.