SVB Financial Group Files Lawsuit Against FDIC for Retaining $1.93 Billion
This legal battle between SVB Financial Group and the FDIC has put the spotlight on the stability of the US banking system and will no doubt be closely watched by the industry.
SVB Financial Group is taking legal action against the US Federal Deposit Insurance Corporation (FDIC) for allegedly retaining $1.93 bn in cash after taking over Silicon Valley Bank (SVB).
The lawsuit, filed in New York, claims that the FDIC's refusal to return the funds is jeopardizing SVB Financial’s restructuring efforts and is causing ongoing damage to the company.
The FDIC had assumed control of SVB, the 16th largest bank in the US at the time, in March this year. The bank had assets and deposits of $209 bn and $175.4 bn, respectively.
This major bank collapse was the largest since the 2008 financial crisis, when Washington Mutual met a similar fate. The lawsuit has brought to light the potential fragility of the US banking sector.
If SVB Financial Group is successful in recovering the $1.93 bn, it could set a precedent for the FDIC's handling of future bank failures. The outcome of the case will also have implications for SVB Financial Group’s restructuring efforts.
The FDIC has yet to provide any comment or response to the lawsuit. This legal battle between SVB Financial Group and the FDIC has put the spotlight on the stability of the US banking system and will no doubt be closely watched by the industry.