Update on Silicon Valley Bank and Signature Bank

After last evening’s announcement that the federal government would protect all depositors of Silicon Valley Bank (SVB) and Signature Bank, today the FDIC announced two further significant steps in the resolution of SVB and Signature Bank.

• The FDIC announced it had transferred all deposits and substantially all the assets of SVB to an FDIC-operated bridge bank, Silicon Valley Bank, N.A., consistent with the FDIC’s announcement yesterday that it had transferred all deposits and substantially all of the assets of Signature Bank to another bridge bank, Signature Bridge Bank, N.A.
• The use of a bridge bank is an update to the FDIC’s original action regarding SVB, where only the insured deposits of SVB were transferred to a Deposit Insurance National Bank of Santa Clara (DINB).  Now all depositors, insured and uninsured, will have access to all of their deposits funds held at the new bridge bank.
• The FDIC also announced it had transferred all of SVB’s and Signature Bank’s Qualified Financial Contracts (as defined in 12 USC 1821(e)) to their respective bridge banks.

The FDIC’s press releases can be found here and here.

Other Developments

• The Bank of England announced that it had taken the decision to put Silicon Valley Bank UK Limited (SVBUK), the UK subsidiary of SVB, into resolution, via a sale of its shares to HSBC UK Bank Plc. The resolution took effect at 7:00 GMT on March 13, 2023. The Bank of England stated that all depositors’ money with SVBUK would be safe and secure as a result of this transaction, and that SVBUK’s business will continue to be operated normally by SVBUK. The Bank of England’s press release can be found here.
• Germany’s Federal Financial Supervisory Authority (BaFin) announced a ban on disposals and payments for Silicon Valley Bank Germany Branch. BaFin also imposed a moratorium on the branch, enforceable immediately but not final. BaFin indicted that the measures will apply “until decisions have been made regarding the business activities of Silicon Valley Bank”.  According to the BaFin announcement, SVB’s German branch had 789.2 million euros in assets as of December 31, 2022, and the branch only conducted a lending business in Germany, not a deposit business, so the actions did not implicate the German deposit guarantee scheme. BaFin’s press release can be found here.
• SVB Financial Group (SVBFG) announced that its Board of Directors had appointed a restructuring committee of five separate directors to explore strategic alternatives for the company and its two nonbank businesses, SVB Capital and SVB Securities. SVB Capital is a venture capital and private credit platform, and SVB Securities is an investment bank and registered broker-dealer. The press release also notes that the committee will explore alternatives for addressing the approximately $3 billion of funded debt held by SVB’s holding company without recourse to the subsidiaries. SVBFG’s press release can be found here.

Clients with questions about SVB or related developments should reach out to any of their regular contacts at Cleary Gottlieb or any of the partners or counsel listed on our website under Banking and Financial Institutions or Bankruptcy and Restructuring.

Additional Cleary Gottlieb content regarding SVB and related developments can be found here.