US Regulators Open to Sharing Losses to Smooth Sale of SVB and Signature

Financial Times2023-03-18

Refusal by FDIC to shoulder burden has been stumbling block in auction processThe Federal Deposit Insurance Corporation’s willingness to discussing loss-sharing marks a significant shift in position ...

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Present83
2023-03-19
Present83
ok
NPC69
2023-03-18
NPC69
K
kong1509
2023-03-18
kong1509
Ok
boomer9595
2023-03-18
boomer9595
Thanks

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However, the FDIC is only willing to take bids from banks for the whole SVB commercial bank, including loans and deposits, according to people involved in the process.On Friday, SVB’s holding company filed for bankruptcy protection. The move was taken as part of an attempt to salvage value from two divisions — a broker-dealer and technology investment business — that are separate from the deposit-taking bank.The FDIC declined to comment on any specifics of the SVB and Signature sales process, which is being run by bankers at Piper Sandler. A banker at Piper Sandler who is involved in the sales process declined to comment.“We are actively marketing both institutions,” said a spokesman for the FDIC. “We haven’t set a deadline for bids, but we hope to have them resolved within a week.”Loss-sharing agreements are common in FDIC sales. The FDIC offered generous loss-sharing agreements to get a number of deals done during the 2008 financial crisis, but later came under criticism when some of the deals proved lucrative for the buyer.Agreeing to a loss-sharing arrangement could also open the government up to accusations that its attempts to rescue some banks are in effect a bailout.Most loss-sharing agreements are set up as a type of insurance that will cap the overall potential losses a buyer could incur from a deal, with the government covering anything above that amount. 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