- SVB was closed by the FDIC on Friday. Depositors are still unable to withdraw their money.
- This has caused funding shortages for start-ups and others in Silicon Valley and beyond.
- If you are an SVB depositor, how much money will you get back in the end?
Silicon Valley Bank closed Friday and customers are unable to withdraw money for now. With cash shortages happening, how much will depositors end up getting back?
This is an important issue. Many start-ups and other businesses that have relied on SVB need to pay their payroll and other bills quickly.
The FDIC guarantees US bank deposits up to $250,000 per account. However, nearly 88% of SVB’s customer deposits were uninsured. So what happens to this money?
Rating agency Moody’s estimates the future of these funds in a note shared late Friday.backed by Moody’s Warren Buffettwhich specializes in assessing the financial strength of financial institutions, SVB depositors should take note.
Moody’s downgraded SVB’s long-term bank deposit rating to ‘Caa2’. The rating agency said this reflected “an 80-90% expected recovery rate for uninsured depositors.”
For depositors, this simply means:
- FDIC insurance means that money in your SVB bank account up to $250,000 is fully covered. All that money will come back.
- If you have more than $250,000 in your SVB bank account, Moody’s estimate will give you 80-90 cents for every dollar you deposit.
Analysts, investors and other financial industry observers are hoping or hoping SVB will be acquired by another financial institution this weekend. This could mean that his newly supported SVB bank will open on Monday morning, giving depositors full access to their accounts.
If that happens, I have a lot of things to sort out this weekend. SVB is the biggest bank failure since the 2008 financial crisis. It has assets of over $200 billion.
After bank IndyMac collapsed in the 2008 financial crisis, the FDIC paid uninsured depositors 50 cents on every dollar. That’s an extreme example. It was much more difficult to sell the assets of failed banks during the widespread crisis, and the prices of those assets were much lower. I’m here.
Late Friday, Moody’s also shared its outlook for SVB’s uninsured depositors, saying that customers “will receive partial payments from the FDIC within the next week and additional payments in the future as the FDIC sells the bank’s assets.” It’s possible,” he predicted.