- This is the FDIC's second attempt to sell SVB
- Traditional institutions have priority over private equity companies
The FDIC asked banks who want to buy the insolvent Silicon Valley Bank and Signature Bank to bid by tomorrow, March 17, Reuters reported, citing insider information.
After regulators assumed receivership of the failed lenders last week, the FDIC is making a focused effort to return them to the private sector.
This is the FDIC’s second attempt to sell SVB. Two early candidates, the Royal Bank of Canada and PNC Financial Group Inc, backed away on Sunday.
Banks to be sold off in entirety
The US regulator is selling both banks in full. If the transactions are unsuccessful, it will consider offers for some of their assets.
Traditional institutions have priority over private equity companies. To this end, the regulator will only allow candidates with an existing bank charter to inspect the banks’ financial reports before making an offer.
Insiders added that Signature buyers will have to give up the bank’s crypto business. Almost 25% of its deposits were from the crypto space toward the end of September.
Taxpayers are off the hook
US President Joseph Biden promised that taxpayers would not cover the costs of saving the banks. A government fund will cover all capital shortfalls and put a levy on other banks. In the event of a successful sale, these shortfalls will be reduced.
SVB is the biggest US bank to become insolvent since the financial crisis of 2008. Its failure wreaked havoc on the US finance sector, casting doubt over the future of startups that relied on it for loans and other financial services.
SVB parent seeks bankruptcy protection
SVB Financial Group, the former parent company of SVB, is looking for bankruptcy protection as one option for selling its VC business and investment bank, its remaining assets.
Regulators shut Signature Bank down due to a great crisis of confidence in its management.
