Silicon Valley Bank and Signature Bank customer deposits are secured.
All customers of Silicon Valley Bank (SVB) will be protected and they will be able to access their money again from Monday, the US authorities say.
The US Treasury, the Federal Deposit Insurance Corporation (FDIC) and the Fed announced the rescue plan in a joint statement.
According to the release, taxpayers will not have to finance the rescue plan mentioned above.
SVB got into a crisis last week after announcing a multi-billion share issue. As a result, customers started withdrawing their deposits from the bank, leading to a cash crisis. On Friday, the US authorities announced that they would take over SVB.
– Today we are taking decisive action to protect the US economy by strengthening public confidence in our banking system, the release says.
According to the release, the measures ensure that the banking system can continue to perform its core tasks in a way that promotes strong and sustainable economic growth. These tasks include securing deposits and providing credit to both households and companies.
Signature Bank closed
The release also states that the supervisory authorities have closed Signature Bank on Sunday. The deposits of this bank’s customers are also secured.
According to the release, shareholders and certain unsecured debts are not protected. The top management is also left out of the plan.
The central bank’s board also announced on Sunday that it will provide additional funding to depository institutions in order to ensure the banks’ ability to meet the needs of their customers.
Biden: Supervision and regulation of large banks should be continued
President of the United States Joe Biden commented on the banks’ situation in his statement on Sunday evening.
According to Biden, the Minister of Finance and the head of the National Economic Council negotiated for a long time with the supervisory authorities of the banking sector in order to find a solution to the banks’ problems.
Biden adds that with the settlement, taxpayer funds are not at risk.
– American people and businesses can be confident that their bank deposits will be available when needed, Biden said.
– I am firmly committed to holding the parties responsible for this mess to account, Biden said.
He also said that he is committed to continuing the supervision and regulation of large banks so that the same situation does not happen again.
Sources: Reuters, AFP