Silicon Valley Bank is the second-largest bank failure in US history; know other major collapses

US-based lender SVB Financial Group on Friday became the largest American bank to fail since the collapse of Washington Mutual in 2008. The lender, based in Santa Clara, was ranked as the 16th biggest in the US at the end of last year, with about $209 billion in assets and about $175 billion in deposits at the end of 2022.

Silicon Valley Bank's failure is the largest since Washington Mutual, a hallmark event that triggered a financial crisis that hobbled the economy for years. Washington Mutual was shut down with $307 billion in assets and $188 billion in deposits, according to Federal Deposit Insurance Corporation (FDIC) data.

Prior to Washington Mutual, the failure of the Continental Illinois National Bank and Trust in 1984 was the largest with $40 billion in assets.  

Other big failures included names such as FirstRepublicBank Corporation, IndyMac, American Savings and Loan, Colonial Bank, Bank of New England, MCorp, among others.

SVB crisis

The embattled startup-focused lender was closed by California regulators on Friday, and it has been put under the control of the US Federal Deposit Insurance Corporation (FDIC).

The company's crisis started on Wednesday when it announced it needed to raise $2.25 billion to shore up its balance sheet. Besides, it said it had sold $21 billion worth of securities from its portfolio. The bank offloaded securities to raise much-needed cash as it struggled with falling deposits.

According to a report by Reuters, the FDIC is racing to find another bank over the weekend that is willing to merge with Silicon Valley Bank, according to people familiar with the matter who requested anonymity because the details are confidential. 

While the FDIC hopes to put together such a merger by Monday to safeguard unsecured deposits, no deal is certain, the sources added.

Separately, SVB Financial, the parent company of Silicon Valley Bank, is working with investment bank Centerview Partners and law firm Sullivan & Cromwell to find buyers for its other assets, which include investment bank SVB Securities, wealth manager Boston Private and equity research firm MoffettNathanson, the sources said. These assets could attract competitors and private equity firms, the sources added.

(With inputs from Reuters)

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