11 Days of Turmoil That Brought Down 4 Banks, Left 1 Teetering
The speed with which four banks collapsed — and one continues to struggle — has left investors reeling. While the failures came in the span of just 11 days, the scenarios that brought them down were each unique.
Here’s how the companies’ turmoil played out, and how regulators responded, amid concern the crisis might still spread:
Silvergate
Silvergate Capital Corp. was the first US bank to collapse, done in by its exposure to the crypto industry’s meltdown. With authorization from the Federal Reserve, the Federal Deposit Insurance Corp. had tried to step in, discussing with management ways to avoid a shutdown.
But the La Jolla, California-based company couldn’t recover amid scrutiny from regulators and a criminal investigation by the Justice Department’s fraud unit into dealings with Sam Bankman-Fried’s fallen crypto giants FTX and Alameda Research.
Though no wrongdoing was asserted, Silvergate’s woes deepened as the bank sold off assets at a loss to cover withdrawals by its spooked customers. It announced plans on March 8 to wind down its operations and liquidate its bank.
Silicon Valley Bank
With Silvergate’s obituary mostly written, investors and depositors in SVB Financial Group’s Silicon Valley Bank were already on edge when the company on March 8 announced a plan to sell $2.25 billion of shares — as well as significant losses on its investment portfolio.
Shares of the company sank 60% the next day on the news, and it collapsed into FDIC receivership the following day. U.S. regulators moved toward a breakup of the bank when they failed to line up a suitable buyer.
But more hopeful news emerged on Monday, when the FDIC extended the bidding process after receiving “substantial interest” from multiple potential buyers.
First Citizens BancShares Inc., one of the biggest buyers of failed US lenders, is still hoping to strike a deal for all of Silicon Valley Bank, Bloomberg News reported Monday, citing people familiar with the matter.
Signature Bank
Signature Bank became the third-largest bank failure in U.S. history on March 12, following a surge in customer withdrawals that totaled about 20% of the company’s deposits.
Silvergate’s implosion four days earlier had left clients skittish about keeping their deposits at Signature Bank, despite its much smaller exposure to crypto. Federal regulators said they lost faith in the company’s leadership, and they swept the bank into receivership.
Both insured and uninsured customers were given access to all their deposits, under a provision regulators tapped known as the “systemic risk exemption.”
