Here’s where things stand for customers and employees of Silicon Valley Bank and Signature Bank, both of which failed this week and were promptly taken over by the FDIC.
Will customers have full access to all of their money on deposit? Yes. US government intervened over the weekend and assured that depositors of the banks will have access to all of their money starting Monday, March 13 and that losses related to SVB’s collapse will not be borne by taxpayers.
That means customers will be able to access their insured deposits as well as their uninsured deposits from the “bridge bank” that the FDIC created for SVB deposits and the one it created for Signature deposits.
Both SVB and Signature were FDIC-insured. That means the FDIC insures up to $250,000 per depositor for each account ownership category. Some customers may be insured for more than $250,000 if they had more than one type of deposit account, since each account is covered separately. What’s more, if more than one person owns an account jointly, each owner is covered up to $250,000.
But the move by the three agencies to provide customers access to their uninsured deposits as well was critical. Most SVB customers, for instance, are businesses, and they have a lot more than $250,000 on deposit because they used SVB for much of their cash management, including payroll.
What are the ways customers can access their money? Customers can access their funds by ATM, debit cards and checks — just like before, according to the FDIC.
What about lines of credit? Per FAQs specific to the SVB and Signature closures, customers’ lines of credit have been transferred to the new bridge banks the FDIC created to handle customers’ transferred deposits and banking services. The agency notes that customers should contact the bank if they have questions about their credit lines.
Can customers continue to keep their money where it is? Yes, but the FDIC will communicate to customers how long they can continue to do so. So far, the FDIC has not established any end dates of services for SVB or Signature customers.
What if a customer has a loan through SVB or Signature? Customers with a loan still have to make payments to the same payment address, even if the FDIC ends up selling the loan. Any changes will be communicated.
Will SVB and Signature employees keep their jobs? Very likely, but perhaps not for long. Typically, in an FDIC takeover, the employees of the failed bank are kept on to help with the transition. Their salary and benefits are paid for by the FDIC during that time. Should the FDIC find a buyer for either bank, the acquiring institution will be the one deciding whether the banks’ employees stay on.