NEW YORK: US authorities on Friday shut Silicon Valley Bank to protect depositors and will reopen branches on Monday under federal control, US and California officials said Friday, as the bank’s woes sparked fears of contagion in the sector.

The California Department of Financial Protection (DFPI) and Innovation closed the California-based SVB and appointed the Federal Deposit Insurance Corporation as receiver of the funds, the FDIC said Friday.

The actions address a bank run-type crisis involving an important tech-oriented lender, protecting customers with up to $250,000 in deposits and buying time to find a potential buyer of the embattled Silicon Valley lender.

The DFPI “has taken possession of Silicon Valley Bank, citing inadequate liquidity and insolvency,” the California agency said.

SVB’s 17 branches will physically reopen Monday under control of the Deposit Insurance National Bank of Santa Clara (DINB), a new entity set up by the FDIC.

“DINB will maintain Silicon Valley Bank’s normal business hours,” the FDIC said. “Banking activities will resume no later than Monday, March 13, including online banking and other services.”

SVP is the first federally insured institution to fail since 2020, the FDIC said.

The SVB crisis sparked a sell-off in European bank shares and volatility in US bank shares.

Investors fear that other banks could face similar losses amid financial fallout from rising interest rates with central banks moving aggressively to tame decades-high inflation.