Virtual Bank Continues Under New Bank
The parent of Virtual Bank, Lydian Private Bank, was seized by regulators on August 19th and the FDIC arranged for Sabadell United Bank to assume all deposits. There have been cases in the past when the acquiring bank wasn't interested in the internet deposits of the failed bank. But that doesn't seem to be the case with Sabadell United. Virtual Bank continues to operate as before at VirtualBank.com with the same rates on its eMoney Market account and eCDs. I just called Virtual Bank, and I was told that Sabadell United has no plans to change Virtual Bank. It's a little surprising since Sabadell United didn't even mention Virtual Bank in its press release.
I was also told that all existing Virtual Bank CDs will continue until maturity with the same rates. Most banks that have acquired failed banks in the last few years have reduced existing CD rates. Banks are allowed to make such changes as long as they allow a penalty-free early withdrawal. In today's ultra low interest rate environment, that doesn't help much. So I'm glad to see Virtual Bank CD holders won't be hit this way.
Every now and then the acquiring bank will offer some good deposit deals at the branches or website of the failed bank. In these cases the acquiring bank is wanting to prevent deposits from leaving due to the bad publicity of the closure. Unfortunately, I don't see any indications of any good deposit deals at Virtual Bank. Just like they were before the failure, the online money market and CD rates are fairly competitive, but currently there aren't any great deals.
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