Silicon Valley Bank collapse: What happens to customer deposits, loans

The collapse of Silicon Valley Bank, the main lender to US startups since the 1980s, shocked global markets. This is not only the largest bank failure since 2008, but also the second largest ever for a retail bank in the United States.

Nearly $175 billion of the bank’s customer deposits are now under its control Federal Deposit Insurance Corporation, or FDIC, has assured depositors full access to their insured deposits after all bank branches opened Monday morning. The financial body also said that old bank checks will also be honoured.

if you had a deposit account

All depositors will have full access to their insured deposits from Monday. The FDIC also assured that uninsured depositors would be paid advance dividends within the next week. Uninsured depositors will receive a receipt certificate for the balance amount of their uninsured funds. As the FDIC sells Silicon Valley Bank’s assets, future dividends may be paid to uninsured depositors.

if you had debt

As receiver, the FDIC will retain all of Silicon Valley Bank’s assets for later disposal. Loan customers should continue with their payments as usual.

If you are owed money for a service or product provided

The customer is eligible to file a claim against Silicon Valley Bank for settlement of outstanding dues for the service or product provided. Those who were not paid for services rendered before March 10 will need to refer the recipient online or by mail.

Known for lending money to some of the largest technology startups, SVB was the 16th largest US bank by assets: at the end of 2022, it had $209 billion in assets and approximately $175.4 billion in deposits.

The bank’s collapse is not only the largest bank failure since Washington Mutual in 2008, but also the second largest retail bank failure in the United States.