Federal Home Loan Bank of San Francisco provided $4.3 billion to Silvergate late last year and did not force Silvergate to repay the advance, which is rumored to be the reason why the crypto-friendly bank went into voluntary liquidation, it said.
“FHLBank San Francisco has not requested or compelled Silvergate Bank to prepay its outstanding advances,” a spokesperson for the bank told CoinDesk. “Silvergate has made a decision to prepay the outstanding advance payment based on its own assessment of its own position.”
Silvergate Capital disclosed in a March 1 securities filing that it had to expedite securities sales to raise funds to repay a San Francisco Federal Home Loan Bank advance. It fully repaid those loans by earlier this month.
Some in the cryptocurrency industry speculate that this ultimately sparked a bank run on Silvergate. Silvergate’s share price plummeted the day after the disclosure, and days later it announced it was suspending operations and going into voluntary liquidation.
“We cannot speculate on what was the reason for their eventual decision to advance, however, their existing tenure for remaining advances prior to making an advance is short-term,” the spokesperson said.
The spokeswoman said FHLBank could call for early repayments if there were a “material adverse change” in the banks it borrowed from, but that did not happen with Silvergate.
“Similarly, we have not required or compelled Silvergate Bank to prepay its outstanding advances. We assume that any prudent borrower will assess its position and the information to be disclosed, and do what is best in its own interests with respect to all its assets and liabilities. decision,” the statement said.
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