About 4,000 employees of Silicon Valley Bank are set to receive $25 million that has been trapped for weeks in an employee stock purchase program, according to the Federal Deposit Insurance Corp.
An FDIC spokesperson confirmed to NBC News on Tuesday that the money will be remitted to employees “shortly.” The payouts won’t require tapping the government’s deposit insurance fund that was used to save SVB depositors, because it concerns funds held by the bank prior to its collapse.
The agency’s move ends a month and a half of uncertainty for employees of the failed lender after government regulators shut it down March 10 and backstopped all SVB deposits days later.
But regulators’ efforts to wind down the bank, whose assets Raleigh, North Carolina-based First Citizens Bank purchased on March 27, didn’t initially address the employee stock purchase plan that had allowed SVB employees to contribute as much as 10% of their earnings (up to $25,000) into a fund that would buy the company’s stock at a discount.
Per the plan’s schedule, the fund is tapped every six months to purchase stock for the participating employees. SVB was in the middle of those purchase times when it collapsed, at which point its publicly traded stock ceased to exist.
First Citizens’ purchase of SVB assets didn’t include the ESPP funds. Instead, those payroll contributions have sat on the balance sheet of the failed lender’s holding company, known as SVB Financial Group, as an “accounts payable” ever since.
Three current SVB employees, who weren’t authorized to speak publicly about internal compensation matters, told NBC News that ambiguity over the fate of staffers’ ESPP contributions fueled worries that they had lost that money for good. One of the employees said he has over $20,000 locked up in the program.
Some current staffers raised concerns in recent weeks to the human resources department. Bank officials responded last week that they were aware of the situation and were working with SVB Financial Group and the FDIC on a resolution, without giving a timeline, according to communications seen by NBC News.
First Citizens declined to comment Tuesday.
The FDIC spokesperson acknowledged that the handling of the ESPP funds has been a lingering issue since it stepped in to resolve the second-largest bank failure in U.S. history. (Bloomberg earlier reported the agency’s planned move on Tuesday.)
All three employees said they had yet to receive internal communications about the resolution as of Tuesday afternoon, although the FDIC spokesperson said they would be notified soon.
“I’m skeptical until I actually have those funds,” one of the SVB staffers said Tuesday, but added, “If that holds true, I am absolutely relieved to say the least.”