The management team behind the American investment bank Silicon Valley Bank (SVB) alerted the leadership of the Federal Reserve System about a potential, extreme liquidity event on the same day regulators closed the bank. The concern centered on the possibility of a one-day withdrawal surge approaching $100 billion, a scenario that would immediately test SVB’s ability to meet depositor demands. This account comes from statements attributed to a senior official from the Federal Reserve’s Division of Banking Supervision, reported by Interfax to Congress.
According to the official, the morning of March 10 initially suggested that, with regulatory support, the bank could arrange a loan structure that might satisfy the needs of its depositors. The early assessment assumed a manageable outflow path under existing liquidity provisions and backup facilities. The underlying aim was to balance liquidity with solvency while continuing to operate in a way that would reassure both customers and the broader financial system. [Source: Interfax]
Yet, during that same morning, SVB communicated a stark change in expectations. The bank informed federal supervisors that it expected a significantly larger deposit outflow than initially anticipated. Depositors appeared ready to withdraw as much as $100 billion in a single day, a level that would exceed the bank’s available cash and liquid assets. This shift underscored a rapid erosion of confidence and a strain on SVB’s liquidity position, complicating any plan to bridge the gap with ordinary funding sources. [Source: Interfax]
Earlier reports noted a record withdrawal spike the day prior, with customers pulling out about $42 billion from SVB in a single 24-hour period. The extraordinary run on deposits reflected widespread concerns about the bank’s financial health and its capacity to meet suddenly heightened liquidity demands. The pace of withdrawals intensified scrutiny of SVB’s balance sheet, risk controls, and liquidity management practices as the situation evolved. [Source: Interfax]
In the first half of March, the Federal Deposit Insurance Corporation (FDIC) issued statements confirming the collapse of SVB, a major U.S. financier by asset size. Ranked around 16th in assets among U.S. banks, SVB’s failure marked the largest bank insolvency in more than a decade and a half and prompted immediate questions about regulatory oversight, the resilience of the U.S. banking system, and the effectiveness of risk management in high-growth, technology-driven financial institutions. [Source: Interfax]
Following the collapse, regulatory actions and market responses began reshaping the landscape for SVB’s customers and related institutions. The First Citizens Bank & Trust Company subsequently entered into structures aimed at absorbing SVB’s operations and accounts, signaling a broader corrective process in which larger, more diverse banks sought to stabilize client relationships and provide continuity for those relying on SVB’s services. The evolution of this resolution highlighted how, in moments of sudden stress, liquidity management, investor confidence, and operational continuity become the triad that regulators, financial institutions, and customers monitor most closely. [Source: Interfax]