This is a breaking news story and has been updated as of 6:45PM EDT on March 12:
While an acquirer has yet to be found for Silicon Valley Bank, it appears, as of 6:15pm EDT, that all deposits, including those greater than $250,000 will be available on Monday morning — good news for countless wineries:
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
You can view the entire press release at the Federal Reserve’s website.
Silicon Valley Bank, a lender to numerous wine industry clients and tech companies, was shut down by federal regulators on Friday, according to a press release by the Federal Deposit Insurance Corporation (FDIC).
Silicon Valley Bank (SVB) is headquartered in Santa Clara, Calif. and was shuttered by the California Department of Financial Protection and Innovation.
SVB failed to secure the $1.8 billion in capital needed to cover its client deposits, according to CNN. Stocks fell by 60 percent on Thursday, per Reuters, as SVB sold $1.75 billion in shares in an attempt to recoup funds lost from a previous Treasury sale. Bloomberg described the situation as the “biggest U.S. bank failure in more than a decade.”
SVB has lent over $4 billion to winery clients since 1994, according to the bank’s website. A recent SEC filing indicates an apparent $1.158 billion in outstanding loans to premium wine clients. Wine brands that have previously worked with SVB include Chateau Montelena, Westwood, CIRQ, Ram’s Gate, and Darioush. Other significant clients include tech firms, healthcare corporations, and various startups.
Approximately 400 industry clients banked with SVB’s premium wine division, which employed some 35 professionals that specialize in wine, according to a March 10 email newsletter from Wine Business. Meanwhile, the San Francisco Chronicle reports that “an estimated thousands of wineries are locked out of their Silicon Valley Bank accounts.”
The FDIC, which took control of the bank’s assets on Friday, formed the Deposit Insurance National Bank of Santa Clara (DINBSC) to pay out insured SVB clients, up to the federal insured maximum of $250,000. Those with more than $250,000 deposited at SVB have been instructed to contact the FDIC by phone. According to S&P Global Market Intelligence data shared by the San Francisco Chronicle, 97 percent of SVB’s accounts contained more than the insured maximum of $250,000.
SVB clients will be paid dividends in the next week based on their insured account balances. Uninsured clients will receive an advance, and later full payments, as the FDIC settles and liquidates SVB assets. A note about uninsured deposits in the FDIC press release caused further stress among clients — prompting questions about whether they’ll ever see a full return of their funds. For banking clients dealing with larger accounts — such as wineries — this might cause significant concern.
Beyond providing banking resources, SVB also published an annual report on the wine industry every year since 2001. The 2023 SVB State of the Wine Industry Report, published in January, made headlines after highlighting the decline in wine consumption among Gen Z and young millennials. Data from the past year showed that the 60+ category of consumers was the sole age group to show more growth in 2022.
At the time of publishing, the full impact that the SVB shutdown will have on the wine industry is not known.
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