Updates Regarding Silicon Valley Bank and Signature Bank

March 14, 2023

This afternoon, the FDIC circulated a financial institution letter (FIL) describing the obligations of counterparties and vendors to Silicon Valley Bridge Bank, N.A. (SVBB), and Signature Bridge Bank, N.A. (SBB), and vice versa.

The FIL follows the weekend actions taken by the FDIC as receiver for Silicon Valley Bank (SVB) and Signature Bank to transfer their deposits and assets to SVBB and SBB, respectively.

The FIL emphasizes the following points:

  • The bridge banks are performing under all failed bank contracts and expect all counterparties to similarly fulfill their contractual obligations.
  • All vendors providing services should continue to provide such services.
  • All authorized signers, account details, Tax Identification Number, wire/ACH instructions, and pre-failure processes remain in effect, and can and should be utilized to provide such services, until a notice of a change is received from a bridge bank.
  • The FDIC as receiver is authorized to enforce these contracts and to transfer the contracts notwithstanding any apparent limits on transfer in the contract.
  • Vendors and counterparties with contracts with the bridge banks are legally obligated to continue to perform under the contracts, and the bridge banks are obligated to and have the full ability to make timely payments to vendors and counterparties and otherwise perform their obligations under the contracts.
  • All obligations of the bridge banks are backed by the FDIC and the full faith and credit of the U.S. government.
  • Failure to meet obligations may result in legal action by the U.S. government.

Separately, SVBB posted instructions for counterparties on its website, indicating that it “has fully stepped into the shoes” of the former SVB, and posted the Transfer Agreement between SVBB and the FDIC (as receiver for SVB).  

The SVBB instructions state that:

  • SVBB has assumed all loan positions, including as lender, issuing bank, administrative agent or any other function formerly performed by SVB.
  • All of SVB’s commitments to advance funds under existing credit agreements will be honored by SVBB, and any other duties and roles under existing credit agreements will be performed by SVBB. 

The instructions also state that SVBB is not in FDIC receivership, presumably to clarify any remaining confusion about the status of the bridge bank. 

The former Signature Bank website similarly indicates that SBB has commenced operations will all of the deposits and substantially all the assets of Signature Bank, and “will continue to take care of its clients, providing a full suite of loan, deposit, and banking services.”

For additional information, please see:

  • FDIC FIL-10-2023 (link)
  • SVBB Details for Counterparties (link)
  • SVBB Transfer Agreement (link)

Clients with questions 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, Signature Bank and related developments can be found here.

Cleary Gottlieb is a trusted resource in the financial sector for clear and up-to-the-minute guidance on the evolving regulatory landscape. Our preeminent banking and bankruptcy and restructuring practices have been intimately involved advising the private sector and governments in times of crisis, including the 2008 financial crisis and in the federal government’s actions to stabilize the economy during the COVID pandemic. We have extensive experience advising banking institutions and their depositors, creditors, and investors through the FDIC resolution process.