California takes possession of Silicon Valley Bank, appoints FDIC as receiver

California's financial regulator, the Department of Financial Protection and Innovation, has taken possession of Santa Clara, Calif.-based Silicon Valley Bank, citing inadequate liquidity and insolvency, the agency said.

The DFPI appointed the Federal Deposit Insurance Corp. as the receiver of Silicon Valley Bank, the bank unit of SVB Financial Group. The bank had total assets of roughly $209 billion and total deposits of roughly $175.4 billion as of Dec. 31, 2022.

As the receiver, the FDIC said it will retain all assets from Silicon Valley Bank for later disposition. Depositors at FDIC-insured banks are subject to up to $250,000 deposit insurance in the event of a bank failure. At the time of the bank's closing, the amount of deposits in excess of the insurance limits was undetermined, the FDIC said.

The FDIC created the Deposit Insurance National Bank of Santa Clara, and immediately transferred to it all insured deposits when the state regulator closed the bank, according to an FDIC announcement.

All insured depositors will have full access to their insured deposits no later than the morning of March 13, the FDIC said. The FDIC will pay uninsured depositors an advance dividend within the next week. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.

Silicon Valley Bank's main office and 17 branches in California and Massachusetts will reopen March 13, the FDIC said. Online banking and other services will resume no later than March 13. The bank's checks will continue to clear.

Silicon Valley Bank is the second California bank to shut down this week. The California Department of Financial Protection and Innovation is overseeing the voluntary liquidation of Silvergate Bank, the bank unit of Silvergate Capital Corp., without appointing the FDIC as the receiver.