U.S. regulator is looking for bids for SVB and Signature Bank on Friday, according to sources

By: Michael Wilson

U.S. regulator is looking for bids for SVB and Signature Bank on Friday, according to sources

March 17, 2023 5:17 AM

The US Federal Deposit Insurance Corp. (FDIC) has urged banks interested in acquiring insolvent lenders Silicon Valley Bank and Signature Bank to submit offers by March 17, according to people familiar with the situation.


The latest auctions demonstrate the FDIC's concerted effort to return lenders to the private sector following regulators' takeovers of Silicon Valley Bank (SVB) on Friday and Signature Bank on Sunday, during a weekend of turbulence that resonated throughout the global financial system.


This will be the FDIC's second attempt to sell SVB, following a failed attempt on Sunday. According to the sources, the FDIC has since hired investment bank Piper Sandler Companies to conduct a new auction.

 

According to two sources, the FDIC intends to sell both SVB and Signature in their entirety, but offers for parts of the banks may be entertained if full company transactions do not occur.


Only bidders with an existing bank charter will be able to review the banks' financials before submitting an offer, giving traditional lenders an advantage over private equity groups, according to the two sources.

 

According to the two sources, any buyer of Signature must agree to give up any crypto business at the bank. Still, after the article was published, an FDIC representative told Reuters that the agency would not require crypto activities to be sold off as part of any sale. The representative cited recent comments by FDIC Chairman Martin Gruenberg that the agency is not trying to stop banks from doing anything in particular.


Because the topic is private, the sources requested anonymity. Signature and Piper Sandler did not reply to demands for comment right away.


In order to save SVB and Signature, the government will create a fund that can impose on other banks to offset any capital deficits, as stated by U.S. President Joseph Biden. Successful sales, on the other hand, would help to mitigate such deficiencies.

 

This week, SVB became the largest U.S. bank to fail since the 2008 financial crisis, causing concern in the banking sector and casting doubt on the future of startups that relied on the technology-focused lender for financial services.


Reuters says that PNC Financial Services and the Royal Bank of Canada, which owns the California-focused City National Bank, were among the institutions that looked at the auction for SVB last weekend but decided not to make an offer.


Reuters reported on Wednesday that SVB's old parent company, SVB Financial Group (SIVB.O), is considering bankruptcy as one way to sell its remaining assets, which include an investment bank and a venture capital firm.


The New York financial regulator said that Signature Bank closed on Tuesday because there was "a significant crisis of confidence in the bank's leadership." By the end of September, the bank was well-known in the crypto world, with about a quarter of its deposits coming from the cryptocurrency sector.