Given it is fairly common for FDIC. What is the history in such cases? Do depositors always get all money back or they have to take some haircut?
Insured deposits are paid on first day the bank opens. More than 50% of uninsured deposits are paid within a week. Another 20% or so gets paid within a year or sooner in quarterly installments. Remaining amount gets paid in yearly installments and in all cases was paid within 3 years.
Haircut is guaranteed in this political climate since there is no appetite for a bailout. At least not for SVB. The later ones could be bailed out but SVB is a goner.
The data does not support these statements. E.g. for a random bank I selected on the FDIC site [1], "American National Bank", uninsured depositors got paid 77.8% in three installments: the first 57% two weeks after bank closure, 7.4% after three years and the last 13.3% after five-and-a-half years.
American national had its deposits transferred. The dividend payments were to other creditors.
SVB stock and bond holders will lose everything but it is far from guaranteed that depositors will take a haircut.
Not if someone buys it. Unless a haircut is part of the bid, which seems unlikely. No point having 97% of your new customers pissed off at you.
If it’s not acquired depositors will take a haircut (get paid less) in the unwinding process so that the amount paid out doesn’t exceed the assets available.
Washington Mutual was a bigger failure, but there was another lender who had already attempted to take it over, and had done due diligence, and Washington Mutual had a large amount of unsecured debt which allowed those lenders to take the hit and left depositors completely unscathed.
IndyMac was a smaller bank but it was over $10B in assets and the FDIC had to setup a Bridge Bank because the attempt to auction it off failed, so the FDIC had to impose a loss of 14% of total deposits on the depositors.
> Since 2007, the FDIC has served as receiver for over 525 banks. Only 9 of these failed banks had assets over $10 billion. Thus, the overwhelming majority, over 98 percent, had assets under $10 billion.
The FDIC routinely liquidates banks under $10B. What we have here is not routine, and is Washington Mutual-sized. The smoothness of Washington Mutual being taken over though was probably not something you can expect to rely on.
From a quick look at a random sample, it seems most end up with about ~70% paid out, but there is quite some variance.