US Regulator Sets Friday Bid Deadline For SVB, Signature Bank
Regulators at the US Federal Deposit Insurance Corp (FDIC) have requested banks to submit bids for the failed lenders, Silicon Valley Bank and Signature Bank, by March 17. The move indicates the FDIC’s concerted efforts to return the banks to the private sector. The FDIC took over both banks during a weekend of turmoil, and this will be its second attempt to sell Silicon Valley Bank after the previous auction failed.
Reuters: Regulators at the U.S. Federal Deposit Insurance Corp (FDIC) have asked banks interested in acquiring failed lenders Silicon Valley Bank and Signature Bank to submit bids by March 17, and any buyer of Signature must agree to give up all the crypto business at the bank.… https://t.co/R6Hde6G2wi
— Wu Blockchain (@WuBlockchain) March 16, 2023
Protecting Taxpayers
The FDIC is hoping to sell both banks in their entirety, but it may consider offers for parts of the banks if whole company sales do not happen. The FDIC has retained Piper Sandler Companies to run a new auction, and only bidders with an existing bank charter will be allowed to study the banks’ financials ahead of submitting their offer. This move aims to give traditional lenders an advantage over private equity firms.
Any buyer of Signature Bank must agree to give up all the crypto business at the bank. This clause reflects the regulator’s efforts to avoid risks in the crypto market. US President Joseph Biden has also stated that taxpayers will not bear the cost of salvaging Silicon Valley Bank and Signature Bank.
Crisis of Confidence
The FDIC’s takeover of Silicon Valley Bank has shaken the banking sector and raised doubts about the future of startups that relied on the lender for financial services. PNC Financial Services and Royal Bank of Canada studied but decided against an offer during the previous auction.
Signature Bank’s closure was due to “a significant crisis of confidence in the bank’s leadership,” according to New York’s financial regulator. At the end of September, almost a quarter of Signature Bank’s deposits came from the cryptocurrency sector, and its closure has caused a stir in the crypto community.
SVB Financial Group, the former parent of Silicon Valley Bank, is exploring bankruptcy protection as an option to sell its remaining assets, including an investment bank and venture capital business.
Stabilizing the Banking Sector
The FDIC’s auction of Silicon Valley Bank and Signature Bank could help minimize capital shortfalls and stabilize the banking sector. The FDIC has declined to comment on the matter, and sources have requested anonymity because of confidentiality. Signature Bank and Piper Sandler Companies have not yet responded to requests for comment.
