US authorities closed Silicon Valley Bank (SVB) on Friday to protect depositors, California state officials announced.
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Bank branches will resume work on Monday under the control of federal authorities.
The California Department of Financial Protection (DFPI) closed SVB, entrusting the recovery of funds to the Federal Deposit Insurance Corporation (FDIC).
This step was taken to stop panic-induced withdrawals from SVB and to protect deposits of up to $250,000 and buy time to find a potential buyer for the bank.
DFPI took over SVB on the basis of insufficient liquidity and insolvency, the agency said in a statement.
SVB’s 17 branches will reopen Monday and operate under the control of the FDIC’s newly created Santa Clair National Deposit Insurance Bank, providing online banking and other services.
SVP is the first federally insured credit institution that has declared insolvency since 2020.
The SVB crisis has caused the release of European bank shares, and also caused the instability of the share price of US banks.
Investors fear that other banks may face similar losses as interest rates rise as a result of aggressive central bank policies as they try to quell the highest inflation in decades.