FDIC purchases more time to unload Silicon Valley Bank and plans breakup

The FDIC says that parties may submit separate bids to Silicon Valley Bridge Bank N.A. The FDIC said that Silicon Valley Bridge Bank N.A. and its subsidiary Silicon Valley Private Bank may be open to separate bids. According to the FDIC, parties will be allowed to submit separate bids on Silicon Valley Bridge Bank N.A. Silicon Valley Private Bank and its subsidiary Silicon Valley Bridge Bank N.A. Both banks and nonbank institutions will be allowed to bid for the asset portfolios. Qualified, insured banks are allowed to submit whole-bank bidding on assets or deposits. According to the FDIC, there has been “substantial interest” by multiple parties and that bidders need more time to consider all options to maximize value and reach an optimal outcome. The FDIC stated that the agency is struggling to find a buyer to buy the second-largest bank failure in American history. This is because the list of potential institutions is small and Silicon Valley Bank is too big for most banks to absorb. Bad memories from 2008’s arranged acquisitions are believed to have discouraged bidders. However, the FDIC announced that Flagstar Bank, a subsidiary New York Community Bancorp, would purchase substantial deposits and loan portfolios of Signature Bank. Signature Bank collapsed just a few days after Silicon Valley Bank. Signature’s digital assets business was not included in the deal. The FDIC will pay deposits directly to customers of this unit. The digital-assets deal does not include Signature’s crypto-business lines. It is required that the FDIC act in best interest of Deposit Insurance Fund. This made it difficult for the FDIC to reach a deal due to the high number of uninsured bank deposits. The DIF now backs the uninsured deposits, so it is more in the best interests of the agency to find a bidder. Bidders have until Wednesday at 8:00 p.m. to make offers on Silicon Valley Private Bank and Silicon Valley Bridge Bank N.A. According to reports, the FDIC has received interest from Apollo Global Management in Silicon Valley Bank’s credit operations. This is a tricky proposition for the agency since selling off parts to nonbanks would be unusual. Blackstone is also reported to have discussed a bid. Concerns about the balance sheets at other regional banks were raised by Silicon Valley Bank’s March 10 failure. Signature Bank collapsed two days after Silicon Valley Bank’s failure. First Republic Bank received a $30 Billion deposit infusion from a group larger banks. The panic spread beyond the United States: UBS bought Credit Suisse over the weekend in an emergency arrangement with Swiss regulators. This was to stop the banking crisis spreading to Europe. Wally Adeyemo, Deputy Treasury Secretary, stated that deposit stability is returning for regional banks. However, shares of First Republic plunged 12% to $20.24 Monday morning after S & P’s second downgrade.