Exclusive US regulator to watch Friday bids for SVB, Signature Bank sources
By David French and Pete Schroeder
(Reuters) – Regulators at the US 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, people familiar with the matter said on Wednesday.
The new auctions show the FDIC making a concerted effort to return lenders to the private sector after regulators took over Silicon Valley Bank (SVB) last Friday and Signature Bank on Sunday, amid a turbulent weekend that ended through the global financial markets reverberated system.
This will be the FDIC’s second attempt to sell SVB after a failed attempt on Sunday. The FDIC has since hired investment bank Piper Sandler Companies to conduct a new auction, the sources said.
The FDIC is aiming to sell both SVB and Signature outright, while bids for portions of the banks could be considered if sales of the entire company do not materialize, two of the sources said.
Only bidders with an existing banking license are allowed to study banks’ financial status before submitting their bid, a move aimed at giving traditional lenders an edge over private equity firms, the two sources said.
The two sources added that any Signature buyer must agree to abandon all crypto business with the bank. But an FDIC spokesman told Reuters after the release that the agency would not require divestitures of crypto activities as part of a sale, noting previous comments from FDIC Chairman Martin Gruenberg that the agency does not intend to divest certain activities from banks to disallow.
The sources asked for anonymity as the matter is confidential. Signature and Piper Sandler did not immediately respond to requests for comment.
US President Joseph Biden has said that US taxpayers will not bear the cost of bailing out SVB and Signature as any capital shortfalls would be covered by a government fund that can levy a levy on other banks. However, successful sales would help minimize such deficits.
SVB last week became the largest US bank to default since the 2008 financial crisis, unsettling the banking sector and raising doubts about the future of startups turning to the tech-focused financial services lender.
Banks considered at last weekend’s auction for SVB but decided against an offer included PNC Financial Services and the Royal Bank of Canada, which owns California-focused lender City National Bank, Reuters reported.
SVB Financial Group, SVB’s former parent company, is exploring seeking bankruptcy protection as an option to sell its remaining assets, which include an investment bank and venture capital firm, Reuters reported on Wednesday.
Signature Bank was closed due to “a significant crisis of confidence in the bank’s leadership,” the New York Financial Conduct Authority said on Tuesday. The bank was well known in the crypto space, and at the end of September almost a quarter of its deposits came from the cryptocurrency sector.
(Reporting by David French in New York and Pete Schroeder in Washington; Additional reporting by Anirban Sen; Editing by Nick Zieminski & Shri Navaratnam)