Newly Formed Bridge Bank for SVB – Some Practical Implications

3 minute read | March.13.2023

On Monday, March 13, 2023, the Federal Deposit Insurance Corporation (“FDIC”) transferred all deposits and substantially all the assets of Silicon Valley Bank (“SVB”), formerly a California state chartered bank that was taken into receivership by the FDIC on Friday, March 10, 2023, to a newly created bridge bank, Silicon Valley Bank, N.A. (“SVBNA”).

On Sunday evening, March 12, 2023, the Federal regulators stated that depositors will have full access to their money beginning on Monday morning when SVBNA, the bridge bank, opened and resumed normal banking hours and activities, including online banking. SVB’s depositors and borrowers automatically became customers of SVBNA. The regulators have advised that customer service and access to funds will be made available. Anecdotal reports indicate some delays and other system glitches likely resulting from extremely heavy traffic.

Below is a discussion of some questions that we expect SVB customers and other parties to have.

How does this affect access to my funds as a depositor?

The Federal regulators indicated that SVBNA will open on the morning of Monday, March 13 and resume normal banking hours and activities, including online banking, and that depositors will have full access to their money (both insured and uninsured deposits). Depositors and borrowers will have customer service and access to their funds by ATM, debit card, and check book, and SVB’s official checks will continue to clear. Depositors should be able to continue to conduct business and have access to their bank accounts in the same fashion as before the receivership.

As an SVB borrower, do I have to continue to perform under my loan?

At this time, SVB Borrowers must continue to comply with their obligations under funded SVB loan agreements, including payment obligations and other covenants (including, if applicable, maintaining an account at SVB). Where clients are in a position to repay SVB facilities in full, they should consider offsetting their deposits against their outstanding loan obligations, and seek a release. A release will ensure that future financing opportunities are not compromised.

At the moment it is unclear what will ultimately happen with SVB loan facilities that are not fully drawn. Loan facilities may be maintained by SVBNA for a period of time while seeking to transfer these assets to another financial institution. Where facilities are not fully drawn, borrowers should act cautiously not to default before they have secured an alternative source of financing until further guidance emerges. Borrowers should also consider seeking back-up or alternative financing.

I pledged my SVB account to secure my loan with another lender. What should I do?

Although your account is now with SVBNA, the lender is still perfected. If there is a deposit account control agreement (“DACA”) over the account, then SVBNA should have assumed SVB’s role and obligations as the control bank under the DACA and is subject to the terms of the DACA. After confirming the terms of your particular DACA, you may wish to amend the agreement to reflect the new account bank.

A secured lender may also consider asking you to move your pledged accounts to a new bank and provide the secured lender with a new DACA over those accounts.

What’s next for creditors of SVB?

File a Claim

Creditors (other than depositors) must submit a claim in writing and proof of the claim to the FDIC on or before the claims bar date. Note that the claims bar date has not yet been established. Below we have listed several ways in which you can file a claim:

FDIC as Receiver for SVB
Attention: Claims Agent
600 North Pearl Street
Suite 700
Dallas, TX 75201