FDIC to break up SVB, aim for separate private unit sales

March 20 (Reuters) – The Federal Deposit Insurance Corporation on Monday decided to break up Silicon Valley Bank (SVB) and hold two separate auctions for its traditional deposit division and its private bank after failing to find a buyer for the failed bank last week found a lender.

It will bid for Silicon Valley Private Bank until March 22 and for the bridge bank until March 24. The private bank, which is part of SVB’s retail activities, focuses on high-net-worth individuals.

Banks and non-bank financial firms are allowed to bid on the asset portfolios, the regulator said.

First Citizens BancShares Inc (FCNCA.O), one of the largest buyers of failed US lenders, has made a bid for the entire Silicon Valley Bank, an expert source said. If the FDIC decides to receive bids for parts of SVB, First Citizens expects to bid as well. Bloomberg previously reported on their interest at SVB.

First Citizens said in a statement that it “does not comment on market rumors or speculation.”

Last week, sources told Reuters that the FDIC was planning to restart the sale process for SVB, with the regulator looking into a possible winding up of the failed lender.

The parent company of lender SVB Financial Group had filed for reorganization under Chapter 11 bankruptcy protection on Friday and was seeking buyers for its assets after steps to bolster investor confidence fell through.

The FDIC, which insures deposits and manages moratoriums, had told banks considering bids in the auctions for SVB and Signature Bank (SBNY.O) that it was considering keeping some of the assets under water.

Reuters reported on Sunday that efforts by some U.S. regional banks to raise capital and allay fears for their health are meeting concerns from potential buyers and investors about imminent losses on their assets.

The bank’s run was fueled by balance sheet concerns after the lender sold a portfolio of government bonds and mortgage-backed securities to Goldman Sachs (GS.N) at a loss of $1.8 billion and then attempted to close that gap through a $2.25 billion fundraising effort. .

Reporting by Manya Saini in Bengaluru; Edited by Arun Koyyur and Nick Zieminski

Our Standards: The Thomson Reuters Principles of Trust.


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