The Federal Deposit Insurance Corporation (FDIC) has created the Deposit Insurance National Bank of Santa Clara (DINB) to protect insured depositors of Silicon Valley Bank(SVB) in Santa Clara, California. The bank was closed by the California Department of Financial Protection and Innovation and the FDIC was appointed as receiver. The situation has raised concerns about the stability of the U.S. financial system.
FDIC Creates Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank
FDIC creates DINB to protect insured depositors
Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). All insured depositors will have full access to their insured deposits by Monday, March 13, 2023. Uninsured depositors will receive an advance dividend within the next week and a receivership certificate for the remaining amount of their uninsured funds. Future dividend payments may be made to uninsured depositors as the FDIC sells the assets of Silicon Valley Bank.
Silicon Valley Bank’s (SVB)details
As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. The amount of deposits in excess of the insurance limits was undetermined at the time of closing. The FDIC will determine the amount of uninsured deposits once it obtains additional information from the bank and customers.
Also Read: Everything you want to know about SVB crises
Banking activities to resume
The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours, and banking activities will resume, including online banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.
What will happen with Deposits of the consumers?
When a bank is closed by the regulatory authority and the FDIC is appointed as the receiver, the insured deposits are protected by the FDIC. The FDIC creates a Deposit Insurance National Bank (DINB) to hold the insured deposits and ensure that customers have continued access to their insured funds. The FDIC transfers all insured deposits to the DINB, and insured depositors have full access to their funds no later than the next business day.
Uninsured depositors may receive a portion of their uninsured funds as an advance dividend from the FDIC within the next week, and the remaining amount of uninsured funds will be covered by a receivership certificate. As the FDIC sells the assets of the failed bank, future dividend payments may be made to uninsured depositors.
The main office and all branches of the failed bank will reopen under the DINB’s management, and banking activities will resume, including online banking and other services. The FDIC as the receiver will retain all the assets of the failed bank for later disposition. Loan customers should continue to make their payments as usual.
Overall, the appointment of the FDIC as receiver of a bank provides protection for insured depositors and ensures that they have continued access to their funds.
Retaining assets for later disposition
The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.
Conclusion
The closure of Silicon Valley Bank has raised concerns about the stability of the U.S. financial system. However, the creation of the Deposit Insurance National Bank of Santa Clara by the FDIC has ensured that insured depositors will have continued access to their funds. The situation highlights the importance of deposit insurance and the role of the FDIC in maintaining the stability of the financial system.
7 Lesson Learnt from SVB crises
Related Press release is given as under
WASHINGTON – Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.
All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.
Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.
As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-866-799-0959.
The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.
Silicon Valley Bank is the first FDIC-insured institution to fail this year. The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.