The Silicon Valley Bridge Bank is the successor to Silicon Valley Bank. (Representational)
New York:
The head of Silicon Valley Bridge Bank, created by US regulators to succeed Silicon Valley Bank after it collapsed, on Tuesday urged fleeing depositors to return with their money, as large banks see an influx of funds.
Silicon Valley Bank — a key lender to startups across the United States since the 1980s — collapsed after a sudden run on deposits, prompting regulators to seize control Friday.
“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base,” chief executive Tim Mayopoulos said in a statement, “both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days.
He added: “We are doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy.”
The Federal Deposit Insurance Corporation has said it will cover all SVB depositors, including beyond the usual cap of $250,000 for FDIC protection.
“We are making new loans and fully honoring existing credit facilities,” Mayopoulos said.
SVB’s failure on Friday, the largest US bank failure since 2008, was preceded on Wednesday by the liquidation of Silvergate Bank, a small regional institution favored by the cryptocurrency community.
On Sunday, authorities also forced Signature Bank, the nation’s 21st largest bank, to close.
Flight To Big Banks
Larger banks including JPMorgan Chase and Bank of America have since seen an influx of customers, according to two sources close to the industry.
One added that while the larger institutions are not actively pursuing leads from the closed banks, they are accepting their deposits, which is a large sum.
Clients from small and medium-sized banks have also probably transferred all or part of their funds “into major players, that people think there is no way the government will let go down,” said analyst Alexander Yokum, a regional banking specialist at CFRA.
The extent of the transfers will probably only be known when banks publish their quarterly results beginning in April, or if they publish an interim report before then, Yokum said.
In a note, S&P Global Ratings said it has “not seen evidence that the unmanageable deposit outflows experienced at a few banks have widely spread” to others.
In a joint statement on Sunday, the US Federal Reserve, the FDIC and the Treasury Department said SVB depositors would have access to “all of their money” starting Monday.
The Fed also announced it would make extra funding available to banks to help them meet the needs of depositors, which would include withdrawals.
S&P said it believes that the Federal Reserve measures “have equipped banks with additional liquidity sources if needed and probably also lowered the odds that confidence-sensitivity issues become relevant for a large number of banks.”
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)