FDIC: Institutions required to meet contractual obligations with bridge banks

Following the opening by the FDIC of two bridge banks, Silicon Valley Bridge Bank and Signature Bridge Bank, to assume the deposits and obligations of two failed banks, the agency today confirmed that these institutions are operating as full-service banks. All contracts entered into with SVB and Signature Bank and their counterparties prior to the banks’ failures have been transferred to the bridge institutions, which are backed by the FDIC and the full faith and credit of the U.S. government, the agency said.

“Accordingly, vendors and counterparties with contracts with the bridge bank are legally obligated to continue to perform under the contracts, and the bridge is obligated to and has the full ability to make timely payments to vendors and counterparties and otherwise perform its obligations under the contract,” the FDIC said.