US Court Dismisses SVB Parent’s $1.71 Billion Claim Against FDIC
Summary
- A US court dismissed the SVB parent company’s damages claim of about $1.71 billion against the FDIC.
- The court found SVB management’s decision to take on interest-rate and liquidity risk was a substantial cause of losses from the bank’s collapse.
- The ruling eliminated the possibility of an SVB recovery of $1.7 billion and any burden falling on the Deposit Insurance Fund (DIF).
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A US court dismissed a damages claim of about $1.71 billion brought by the parent company of Silicon Valley Bank against the Federal Deposit Insurance Corp. after the bank’s 2023 collapse.
Reuters reported on Aug. 31 that the court found decisions by SVB executives to take on excessive interest-rate and liquidity risk were a substantial cause of losses tied to the bank’s failure.
The court therefore concluded the FDIC could not be held responsible for losses incurred in disposing of SVB’s assets after taking over the bank. The decision followed a 12-day bench trial.
The ruling ends any chance of the SVB side recovering about $1.7 billion from the FDIC. It also removes the possibility that the Deposit Insurance Fund, which the FDIC used to cover the cost of SVB’s failure, would bear the related burden.
JH Kim
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