Hot Off the Press: Efforts to Stabilize the U.S. Banking System

As of 8:00 PM ET March 12, 2023

In a joint statement, the Department of the Treasury, the Federal Reserve and the FDIC announced that:

• SILICON VALLEY BANK: All depositors will have access to all of their money starting Monday, March 13.
  • Shareholders and certain unsecured debtholders will not be protected.
• SIGNATURE BANK: Signature Bank, a New York state chartered bank, was closed today by its state chartering authority. All depositors of Signature Bank will be made whole.
  • Shareholders and certain unsecured debtholders will not be protected.
• The Federal Reserve announced a $25 billion new Bank Term Funding Program (BTFP) to ensure eligible banks can meet the needs of their depositors. The loans are up to one year in length and are secured by U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets.

While the action by the U.S. regulators is welcome in protecting depositors of SVB in the U.S. the situation with SVB’s UK subsidiary is unaffected by the resolution of the U.S. parent. The UK Government and the Bank of England have been seeking rescue bids from various third parties over the weekend, but at the time of writing no deal has been secured. Without a successful rescue bid, SVB UK will likely be placed into a bank insolvency process by application of the Bank of England.

The guidance provided here is updated as of the time above. Given the exceptionally dynamic nature of the situation, we encourage you to reach out to your Orrick client team. We will provide refreshed guidance and additional information as developments unfold and more information becomes available.