Is Silicon Valley Bank Discontinued? What Happened? Scandal
Fate: California regulators shut Silicon Valley Bank down on March 10, 2023. The FDIC took over as receiver. First Citizens Bank later bought most of the deposits and loans.
Silicon Valley Bank opened in 1983 in Santa Clara, California. For 40 years it was the main bank for technology startups and the investors who funded them. If you started a tech company in the United States and needed a business bank account, SVB was usually the first call.
The bank worked the way most banks do. It held deposits from customers and then invested or lent that money out to earn a return. During the years when interest rates were very low, SVB’s tech clients were sitting on a lot of investor money and deposited large amounts at the bank. SVB put a big share of those deposits into long-term government bonds that paid a low but steady return.
Then interest rates started rising sharply in 2022. When rates go up, older bonds that were bought when rates were lower lose value. SVB was holding a large amount of those bonds, and they were worth less than what the bank had paid for them.
In early March 2023, SVB announced it had sold some of those bonds at a loss and needed to raise more money. That news scared customers. Tech startups and the investors who funded them heard the announcement and started pulling their deposits out. Because so many of SVB’s customers knew each other and acted quickly, the withdrawals came in a huge wave. In less than 48 hours the bank could not keep up.
On March 10, 2023, California regulators shut SVB down. The FDIC, the US government agency that steps in when banks fail, took over and kept basic services running. On March 26, First Citizens Bank agreed to buy most of SVB’s deposits and loans from the FDIC. The SVB name and the bank itself were gone, but the accounts and loans moved to a new owner.
SVB’s collapse was the second-largest bank failure in US history at the time. It set off concern about other regional banks and led regulators to take a closer look at how banks handle the risk of rising interest rates.
Timeline
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1983
- Silicon Valley Bank opens in Santa Clara, California, focused on serving technology startups and their investors.
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2021
- Tech funding is at a peak. SVB's deposits grow rapidly as startup clients hold large cash balances. The bank invests heavily in long-term government bonds at low interest rates.
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2022
- Interest rates rise sharply. The value of SVB's bond portfolio falls, creating large unrealized losses on the books.
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2023
- March 8 — SVB announces it sold bonds at a loss and needs to raise new capital. The news triggers alarm among customers.
- March 10 — California regulators shut SVB down after a wave of deposit withdrawals. The FDIC takes over as receiver.
- March 26 — First Citizens Bank agrees to buy most of SVB's deposits and loans from the FDIC. The SVB brand is retired.
Frequently Asked Questions
What was Silicon Valley Bank (SVB)?
SVB was a bank founded in 1983 in Santa Clara, California. For decades, it was the main bank for tech startups and the investors who funded them.
Why did so many tech companies use SVB?
It understood the startup world. If you launched a tech company and needed a business account, SVB was usually the first place people recommended.
How did SVB make money?
Like most banks, it held customer deposits and invested or lent that money out. During years of low interest rates, tech companies deposited huge amounts of cash, and SVB invested much of it in long‑term government bonds.
What went wrong with those bonds?
When interest rates rose sharply in 2022, older bonds lost value. SVB was holding a lot of those low‑rate bonds, and they were worth less than what the bank had paid for them.
What triggered the crisis?
In early March 2023, SVB announced it had sold some bonds at a loss and needed to raise more money. That scared customers. Startups and investors began pulling their deposits out very quickly.
Why did the withdrawals happen so fast?
SVB's customers were tightly connected. Once a few investors warned their companies to move money, the message spread instantly. In less than two days, the bank couldn't keep up with the outflow.
When did SVB fail?
On March 10, 2023, California regulators shut the bank down. The FDIC took over to keep basic services running.
What happened to customer accounts?
On March 26, First Citizens Bank agreed to buy most of SVB's deposits and loans from the FDIC. Customers' accounts moved to First Citizens.
How big was this failure?
It was the second‑largest bank failure in U.S. history at the time.
Why did SVB's collapse worry people?
It raised concerns about other regional banks and how they manage the risk of rising interest rates. Regulators took a closer look at the whole system afterward.
Does SVB still exist?
No. The name and the bank itself are gone. Its accounts and loans now belong to First Citizens.
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