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The US Federal Deposit Insurance Corporation (FDIC) has decided to break up Silicon Valley Bank (SVB) and hold two separate auctions for traditional deposit units and private banks after failing to find a buyer for the failed lender last week.
It will seek bids for Silicon Valley Private Bank until March 22 and for bridge banks until March 24.
Bank and non-bank financial companies will be allowed to bid on asset portfolios, the regulator said.
First Citizens BancShares Inc, one of the biggest buyers of failed US lenders, still hopes to strike a deal for all of Silicon Valley Bank, according to a report in Bloomberg News, citing people familiar with the matter.
First Citizens and the FDIC did not immediately respond to Reuters requests for comment on the report.
The sudden collapse of Silicon Valley Bank has rattled the US and Canadian markets. Producers Kieran Oudshoorn and Lauren Bird examine what led to the bank’s failure.
Last week, sources told Reuters that the FDIC is planning to restart the sale process for SVB, with the regulator seeking a potential break-up of the failed lender.
The parent company of lender SVB Financial Group on Friday filed for reorganization under Chapter 11 bankruptcy protection and is seeking buyers for its assets after measures to preserve investor confidence failed. The FDIC, which insures deposits and manages receiverships, has informed banks mulling bids at auctions for SVB and Signature Bank which has been considering retaining some assets that are underwater.
Reuters reported on Sunday that efforts by some regional US banks to raise capital and allay fears about their health are running afoul of potential buyers and investors’ concerns about asset losses.
The run on the bank was triggered by balance sheet concerns after the lender sold a portfolio of treasuries and mortgage-backed securities to Goldman Sachs at a loss of $1.8 billion US ($2.5 billion Cdn) and then tried to plug the hole through $2.25 billion. Fundraising US ($3.1 billion Cdn).
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