LOS ANGELES: California’s banking regulators on Friday closed SVB Financial Group, the largest bank failure since the 2008 financial crisis, moving quickly to protect depositors as a crisis at the startup-focused lender rippled through global markets and hit banking stocks.

The regulator appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver, putting the tech-heavy lender into receivership and will dispose of its assets, according to a statement.

Silicon Valley Bank (SVB) is the first FDIC-insured institution to fail this year, the FDIC said. The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas on October 23, 2020.

The main office and all branches of SVB will reopen on March 13 and all insured depositors will have full access to their insured deposits no later than Monday morning, according to the FDIC statement.

Technology workers whose paychecks relied on the bank were worried about getting paid on Friday. An SVB branch in San Francisco showed a Scotch-taped note telling clients to call a toll-free telephone number.

SVB, which does business as Silicon Valley Bank, was not immediately available for comment.

Treasury Secretary Janet Yellen told lawmakers on Capitol Hill on Friday the department was aware of recent developments and was monitoring the situation, calling it “a matter of concern” when banks experience losses, according to CNBC.

The FDIC said it would seek to sell SVB’s assets and that future dividend payments may be made to uninsured depositors.

The startup-focused lender scrambled this week to reassure its venture capital clients their money was safe after a capital raise led to its stock collapsing 60 per cent and contributed to wiping out over $80 billion in value from bank shares.

Published in Dawn, March 11th, 2023