What the FDIC SVB and Signature takeover means for bank customers and employees
Jeanne Sahadi, CNN
Here’s where things stand with customers and employees of Silicon Valley Bank and Signature Bank, both of which crashed this week and were quickly turned over to the FDIC.
Will clients have full access to all their money on deposit?
Yes.
Over the weekend, the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation released a joint statement noting that they are taking steps that “totally protect[t] all contributors. Contributors will have access to all their money starting Monday, March 13th. The taxpayer will not bear any losses associated with the reorganization of Silicon Valley Bank.
A similar announcement was made for Signature Bank clients.
This means that customers will be able to access their insured deposits as well as their uninsured deposits from the “intermediary bank” set up by the FDIC for SVB and Signature Bank deposits.
Both SVB and Signature have been insured by the FDIC. This means the FDIC insures up to $250,000 per depositor for each category of account ownership. Some clients may be insured for more than $250,000 if they have had more than one type of deposit account, as each account is covered separately.
Moreover, if the account is jointly owned by more than one person, each holder is covered up to $250,000.
But the move by the three agencies to give clients access to their uninsured deposits was also critical. Most of SVB’s clients, for example, are businesses and have well over $250,000 in savings because they used SVB for most of their cash transactions, including payroll.
How can clients access their money?
SVB and Signature customers will enjoy many of the same banking conveniences they had before their banks were taken over.
“Savers and borrowers…will get customer service and access to their funds through ATMs, debit cards and check writing just like before. Silicon Valley Bank official checks will continue to pay. Loan customers should continue to make loan payments as normal,” the FDIC said in a statement Monday regarding SVB.
A similar statement was made for Signature.
How about credit lines?
According to FAQs related to the closure of SVB and Signature, customer lines of credit have been transferred to new intermediary banks established by the FDIC to handle transferable customer deposits and banking services. The agency notes that clients should contact the bank if they have questions about credit lines.
Can customers continue to keep their money where it is?
Yes, but the FDIC will let customers know how long they can continue to do so.
Features of the closure of each individual bank will be different. But, for example, when the FDIC acquired the Bank of Eastern Shore in Maryland on April 27, 2012, it gave customers until May 25 to open accounts with other institutions, but prior to that they had different expiration dates for different types. services (such as online banking services, direct deposits, etc.).
So far, the FDIC has not set end-of-service dates for SVB or Signature customers.
What if the client has a loan through SVB or Signature?
Customers with credit still have to make payments even if the FDIC eventually sells the credit.
For now, the agency says, “You can continue to send payments to the same billing address… You will receive an email notifying you of any changes.”
Will SVB and Signature employees keep their jobs?
Very likely, but perhaps not for long.
Typically, in an FDIC takeover, employees from the bankrupt bank stay behind to help with the transition. During this time, their wages and benefits are paid by the FDIC. “We generally aim to keep these employees in the settlement process to ensure continued customer service and access to deposits,” the spokesperson said.
The FDIC has reportedly offered Silicon Valley bank employees 45 days of work and 1.5 times their salary. The FDIC did not confirm the figures, telling CNN that it is not discussing salary arrangements it makes with former bank staff. He also did not respond to a question about whether employees who were not fired would receive severance pay.
If the FDIC finds a buyer for any of the banks, it will be up to the buying organization to decide whether the bank’s employees stay.
But, as with any corporate merger, if SVB and Signature are sold to other organizations, it wouldn’t be surprising if layoffs follow.
The-CNN-Wire
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The post “What FDIC SVB and Signature Acquisition Means for Banks’ Customers and Employees” first appeared on KION546.
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