Dive Brief:
- SVB Financial Group is losing $9 million a month in interest on deposits that regulators seized in March, following the collapse of its subsidiary, Silicon Valley Bank, a lawyer said in court on Tuesday, according to Bloomberg.
- The parent company of the failed Santa Clara, California-based bank, wants the Federal Deposit Insurance Corp. to put the nearly $2 billion it seized in March into a court-controlled escrow account, according to court documents filed Tuesday.
- SVB Financial, which filed for bankruptcy on March 15, said it has already lost $42 million in interest that the deposits would have generated, and stands to lose $100 million annually if the regulator continues to hold on to the money, according to Reuters.
Dive Insight:
Following the FDIC’s takeover of Silicon Valley Bank in March, regulators directed all deposits into the newly created Silicon Valley Bridge Bank. SVB depositors were allowed to access the funds they had in the old bank in the new bridge bank.
However, on March 16, one day before SVB Financial filed for bankruptcy, regulators directed SVB Financial’s deposits back into an account under FDIC control while it explored claims it may bring against SVB Financial.
SVB Financial sued the regulator last month in an attempt to retrieve the cash, Reuters reported.
The company claims the FDIC’s move “improperly blocked” the company’s access to money that is key to repaying bondholders, attorneys and other costs related to its bankruptcy case.
The FDIC’s lawyers said in court that SVB Financial must apply for the money like any other depositor, according to Bloomberg.
According to court papers filed last week, the bank regulator has yet to decide whether the cash should be given to SVB Financial, the wire service reported.
