Silicon Valley Bank Collapse: What Happens To Customers' Deposits, Loans

The collapse of the Silicon Valley Bank, a key lender to US startups since the 1980s, has sent shockwaves in global markets. It is not only the largest bank failure since 2008, but also the second-largest failure ever for a retail bank in the United States.

Nearly $175 billion of the bank's customer deposits are now under the control of the Federal Deposit Insurance Corporation, or FDIC, which has assured the depositors full access to their insured deposits after all the branches of the bank open on Monday morning. The financial body also said that cheques of the old bank would 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 will be paid 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.

If you had a loan

As receiver, the FDIC will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.

If you are owed money for service or product provided

Customers are eligible to file a claim against Silicon Valley Bank for settlement of money owed for service or product provided. Those who were not paid for services rendered prior to March 10 will need to refer to the Receiver online or by mail.

Known for lending money to some of the biggest 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 failure ever for a retail bank in the United States.