California banking regulators on Friday closed SVB Financial Group, putting the tech-heavy lender into receivership and will dispose of its assets, moving quickly to protect depositors as a crisis rippled through global markets and hit banking stocks.
According to a statement, the regulator appointed the Federal Deposit Insurance Corporation (FDIC)as the receiver.
The FDIC said Silicon Valley Bank is the first FDIC-insured institution to fail this year. The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.
Shares of SVB were halted on Friday after tumbling as much as 66% in premarket trading.
SVB, which does business as Silicon Valley Bank, was not immediately available for comment.
Earlier, SVB said it was undergoing a series of conversations to determine the next steps for the company; it wrote in a memo to employees Friday morning seen by Reuters.
“We request all employees work from home today and until further notice, except essential and branch employees. More information will be communicated as soon as it is available.”
Treasury Secretary Janet Yellen told lawmakers on Capitol Hill Friday the department was aware of recent developments and was monitoring the situation, calling it “a matter of concern” when banks experience losses, according to CNBC.
U.S. regulators were observed arriving at the bank’s California offices on Friday, Bloomberg News reported.
The startup-focused lender had 17 branches in California and Massachusetts, the FDIC said.
CEO’s message to employees
Greg Becker, the chief executive of SVB Financial Group, sent a video message to employees acknowledging the "incredibly difficult" 48 hours leading up to the collapse of its Silicon Valley Bank on Friday.
"It's with an incredibly heavy heart that I'm here to deliver this message," he said in a video seen by Reuters. "I can't imagine what was going through your head and wondering, you know, about your job, your future."
The Federal Deposit Insurance Corp was named receiver of Silicon Valley Bank after California banking regulators closed it on Friday.
While the FDIC has taken control of the lender, Becker said he is working with banking regulators to find a partner for the bank, but there is "no guarantee" a deal will be struck.
Becker wore a black zip-up jacket with a logo from Gleneagles, a luxury golf resort in Scotland, and spoke from a room framed by dark cabinets.
He asked employees to "hang around, try to support each other, try to support our clients, work together" to get a better outcome for the company.
"Thank you, and my heart is with you," he said.