SVB Financial sues US FDIC to recover $1.93 billion seized in SVB rescue

[July 10, 2023]  (Reuters) - SVB Financial Group has sued the U.S. Federal Deposit Insurance Corp (FDIC) to recover the $1.93 billion the regulator seized during its takeover of the failed Silicon Valley Bank in March, according to a filing in a bankruptcy court on Sunday.   

A U.S. flag flies outside a branch of the Silicon Valley Bank in Wellesley, Massachusetts, U.S., March 13, 2023. REUTERS/Brian Snyder

The lack of access to the funds was impeding SVB Financial's reorganisation, it said, adding the money should be generating over $100 million in annual interest, without which it would likely have to seek costly and uncertain debtor-in-possession financing.

The FDIC has estimated that Silicon Valley Bank's failure drained its insurance fund by $16 billion and that while it determines SVB Financial's share of the rescue costs, it is legally able to hold the seized funds.

SVB Financial said in the filing while the FDIC asserted it has claims against the company to justify its refusal to pay, it has not identified even a single claim "despite having numerous opportunities".

The FDIC did not immediately respond to a Reuters request for comment.

In May, a U.S. bankruptcy judge had ordered the FDIC to return $10 million in seized tax refund checks to SVB Financial, in a broader dispute over the FDIC's efforts to recoup the cost of rescuing Silicon Valley Bank.

(Reporting by Urvi Dugar and Shubham Kalia in Bengaluru; Editing by Krishna Chandra Eluri)

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