U.S. Regulator Seeks Bids For SVB, Signature Bank By Friday
Regulators at the U.S. Federal Deposit Insurance Corp (FDIC) have requested that banks interested in acquiring failed lenders Silicon Valley Bank (SVB) and Signature Bank submit their bids by March 17. This move comes as the FDIC aims to return both lenders to the private sector after they were taken over by regulators over the weekend.
The Federal Deposit Insurance Corporation denied it would require any purchaser of Signature Bank to divest its crypto activities. An FDIC spokesperson said in an email that “the receivership does not end until all the bank’s assets are sold and all the claims against the bank… https://t.co/fgqhgDwMG9
— Wu Blockchain (@WuBlockchain) March 17, 2023
New Auction for SVB and Signature Bank
This marks the FDIC’s second attempt at selling SVB after a failed effort on Sunday. To aid in the process, the FDIC has retained investment bank Piper Sandler Companies to run a new auction. The FDIC is seeking to sell both banks in their entirety but may consider offers for parts of the banks if whole company sales do not occur.
To level the playing field, the FDIC is only allowing bidders with an existing bank charter to study the banks’ financials ahead of submitting their offers, giving traditional lenders an advantage over private equity firms. However, this move may also limit the pool of potential buyers.
There were initial reports that the FDIC would require any buyer of Signature to divest themselves of all crypto business at the bank. However, an FDIC spokesperson has since denied this, stating that the agency is not looking to prohibit any particular activity by banks. This move is likely to ease concerns among crypto investors and may attract more buyers to the auction.
Bank Collapse
SVB became the largest U.S. bank to fail since the 2008 financial crisis, which has created ripples of concern throughout the banking sector. Several banks, including PNC Financial Services and Royal Bank of Canada, have reportedly studied the bank but decided against submitting an offer.
Signature Bank was shuttered due to “a significant crisis of confidence in the bank’s leadership,” according to New York financial regulators. The bank was known for its focus on the crypto space, with almost a quarter of its deposits coming from the cryptocurrency sector.
Bankruptcy Protection
U.S. President Joseph Biden has stated that taxpayers will not bear the cost of salvaging SVB and Signature, as any capital shortfalls would be covered by a government fund that can place a levy on other banks. However, successful sales of the banks would help minimize such shortfalls.
SVB Financial Group, the former parent of SVB, is reportedly exploring seeking bankruptcy protection as one option for selling its remaining assets, which include an investment bank and a venture capital business.
