Sources: five days after seizing SVB, the FDIC has conducted a stop-and-start auction process, failing so far to find a willing buyer for all of SVB's assets
Big rivals are thus far shying away from scooping up the bank's assets. — Five days after seizing control of Silicon Valley Bank …
New York Times
Context & Ripple Effects
SVB's failure was fast and total: investors and depositors pulled $42B in a day, leaving a negative cash balance, and parent SVB Financial's talks to sell itself collapsed once a capital raise fell through. The FDIC seized the bank and immediately tried a weekend sale, but that first auction produced only one offer, which it rejected, prompting a second auction attempt.
This report is the midpoint of that arc: five days into receivership, big rivals are still declining to take the whole balance sheet, even as the FDIC had promised clients access to 30% to 50% of uninsured deposits. The impasse is what forces the next move — splitting the bank apart.
First-order effects
Large rival banks are declining to acquire all of SVB's assets as a single lot, leaving the FDIC holding the full balance sheet in receivership with no whole-bank buyer.
Uninsured SVB depositors remain dependent on partial payouts — the FDIC's earlier plan of releasing 30% to 50% or more of uninsured deposits — because an acquirer who would assume those deposits has not emerged.
Second-order effects
With whole-bank interest absent, the FDIC pivots to a breakup, running separate auctions for the traditional deposits unit and the private bank (announced March 20, with the auction plan following) — letting bidders cherry-pick clean units while the FDIC retains the problem assets.
The failed single-lot auction weakens the FDIC's negotiating position for the split sales: buyers know the agency is carrying carrying costs on a frozen estate every extra day, which pressures it toward lower-clearing bids.
Third-order effects
If this pattern holds, large-bank failures get resolved through staged dismemberment rather than weekend mergers — the FDIC absorbing losses itself instead of finding one acquirer to take them, which shifts more resolution cost onto the deposit insurance fund and, ultimately, the industry via assessments.
A slower, piecemeal resolution also normalizes partial and delayed access to uninsured deposits as an outcome, changing how large corporate treasurers price the risk of keeping sums above the insurance cap at any single regional bank.
The trend: Bank-failure resolution is shifting from rapid whole-bank acquisitions to FDIC-managed breakups, as potential buyers balk at absorbing entire balance sheets with unrealized losses.
“Any buyer of Signature must agree to give up all the crypto business at the bank, the two sources added.” “Chokepoint 2.0” is not a conspiracy theory. https://www.reuters.com/...
Wtf. On what grounds can a regulator prevent an M&A of a business, by requiring it give up operations in a legal field of business? If the bank was insolvent the regulators have a duty to maximize the liquidation value, and not to constrain it! https://twitter.com/...
The FDIC has brought in the investment bank Piper Sandler to auction off Silicon Valley Bank, kicking off a high stakes sales process, according to two market sources who were granted anonymity to discuss the sale. https://www.politico.com/...
“Any buyer of Signature must agree to give up all the crypto business at the bank, the two sources added.” Wait WHAT, the government making explicit decisions on who gets a bank account. https://twitter.com/...
I get the feeling that a lot of people in Silicon Valley do not know about the Bank Holding Company Act or the concept of the separation of banking and commerce.
“Any buyer of Signature must agree to give up all the crypto business at the bank” Let this settle any remaining doubt. The Signature closure was a targeted takeover in the darkness of a Sunday night to kill off legal activity from banking rails. Operation Chokepoint 2 is real ht…
Good story but it wrongly attributes @apolloglobal and @blackstone's interest in SBV to @business; I first reported it last week cc @realrobcopeland @maureenmfarrell — Shards of Silicon Valley Bank Are for Sale, but No One Is Buying Yet https://www.nytimes.com/...
10) FDIC has asked banks interested in acquiring failed lenders $SIVB & $SBNY to submit bids by Mar. 17. The new auctions show how the FDIC is making a concerted effort to return lenders to private sector after regulators took over $SIVB last Fri & SBNY Sun. https://twitter.com/.…
European banking contagion weighs on U.S. particularly the endless Credit Suisse saga. As usual, waiting for results of the Silicon Valley bank auction. And seeing which bank needs to start raising equity to match the mismatch of held to maturity long paper and deposit flight
Maybe crypto CEOs need to start caring about fraud and money laundering. Maybe it's a bad idea to list tokens issued by executives who are laundering money for U.S. designated terrorists? https://twitter.com/...
Just some casual LP stakes in the funds with which you are lending to the portfolio companies whilst providing margin loans against the GP carry. All very cool. https://twitter.com/...
What's left at Silicon Valley Bank? SVB Capital, which holds meaningful LP stakes in Sequoia Capital, Andreessen Horowitz. Details here: https://www.theinformation.com/ ... by @KateClarkTweets