• The US Federal Deposit Insurance Corporation (FDIC) is attempting to auction the assets of Silicon Valley Bank (SVB) after the lender’s collapse.
• The FDIC has declared the bank „systemic“, giving it more flexibility in offering potential buyers incentives such as loss-sharing agreements.
• California regulators shut down SVB on March 10, while HSBC UK Bank acquired its UK subsidiary for £1 ($1.21).
Overview of Silicon Valley Bank Collapse
The US Federal Deposit Insurance Corporation (FDIC) is looking to make another attempt at auctioning assets of collapsed Silicon Valley Bank (SVB) after failing to find a buyer the first time. California regulators shut it down on March 10, with the FDIC taking control of the bank’s assets after the lender experienced a bank run.
FDIC Plans Second SVB Auction
According to the Wall Street Journal, the FDIC informed Senate Republicans that the agency had more flexibility to sell SVB’s assets after regulators labeled the bank’s collapse a threat to the financial system, with the report citing anonymous sources. Per the report, declaring SVB “systemic” gives FDIC more room to offer potential buyers incentives such as loss-sharing agreements. Meanwhile, a set timetable for next auction remains unknown.
Depositors Protected After Collapse
The FDIC created Deposit Insurance National Bank of Santa Clara (DINB) and transferred insured deposits of SVB to DINB as a way to protect insured depositors. The agency said that all insured depositors would have access to their funds by March 13 and started an auction process for SVBs assets on 11 March, keeping bids open until 12 March 2021. However, according to WSJ report no major US bank offered a bid for lender while FDIC also rejected an offer from another institution made during this period.
HSBC Acquires Subsidiary
Following SVBs collapse HSBC UK Bank acquired lender’s UK subsidiary for just £1 ($1.21). United States President Joe Biden also said that US taxpayers would not bear losses resulting from collapse of both Silicon Valley Bank and Signature Bank.
The overall conclusion is that following Silicon Valley Banks‘ collapse, efforts are being made by U S Federal Deposit Insurance Corporation (FDIC) and other institutions such as HSBC UK Bank in order to secure deposits and minimize losses caused by this incident.