SVB parent sues US regulator

SVB Financial Group, the previous proprietor of the bankrupt Silicon Valley Bank (SVB), has initiated a lawsuit against a financial regulator in the United States in an attempt to recover over $1.9 billion.

In the lawsuit, SVB Financial has alleged that the US Federal Deposit Insurance Corporation (FDIC) contravened US bankruptcy law by retaining $1.93 billion in cash subsequent to assuming control of the group’s banking division earlier this year.

The lawsuit was filed in New York on Sunday, where SVB Financial contended that the FDIC’s failure to return the funds was obstructing its capacity to restructure and causing ongoing damage to the Debtor.

The FDIC took possession of Silicon Valley Bank’s assets in March, which was regarded as the most substantial bank collapse since Washington Mutual during the peak of the 2008 financial crisis.

When the takeover occurred, SVB stood as the 16th largest bank in the US, reporting assets of $209 billion and deposits of $175.4 billion, as disclosed by the FDIC.

Primarily serving the technology industry, SVB experienced a collapse after depositors panicked and initiated mass withdrawals following the bank’s unexpected announcement of the need for $2.25 billion to reinforce its balance sheet.

During that time, the failure of the bank raised concerns about the overall stability of the US banking sector, although the repercussions were limited to the collapse of a few other medium-sized banks.