After splitting the lender into two separate entities, the Federal Deposit Insurance Corporation said it will allow more time for potential suitors to purchase the successor of the failed Silicon Valley Bank.
The agency said in a press release that it is extending the bidding process for Silicon Valley Bridge Bank, N.A. The FDIC and the bidders need more time to explore all options as they want to maximize value and achieve an optimal outcome, as they report that there has been a lot of interest from multiple parties until Friday at 8: 00 p.m. EDT. The FDIC has set a Wednesday evening deadline for bids to buy the entity, after SVB's private bank was spun off for high-net worth customers, Silicon Valley Private Bank.
VICIOUS Bids will be considered from qualified, insured banks, which may also introduce offers in alliance with nonbank partners for buying the entities outright or purchasing the deposits or assets of the institutions. The FDIC said that banks' respective asset portfolios will be entertained by bids from bank and non-bank financial firms.
The FDIC set up Silicon Valley Bridge Bank on March 13, after taking over the SVB after its seizure by California regulators amid a bank run on the institution March 10. The agency set the original bid deadline for Sunday and launched an auction to sell the institution last weekend.
The FDIC has informed banks that are considering an acquisition for SVB and Signature Bank — a New York-based firm that failed shortly after SVB, that the regulator may retain some of the assets underwater as a means of making the acquisition more attractive to prospective buyers.
SVB was exposed to long-dated government securities that created significant interest rate risk when the Federal Reserve hiked rates to the price of a bond as interest rates increased, so it had to sell off portions of its at a loss in order to meet its depositors' concerns about the bank's long-term viability. More depositors with accounts in excess of the FDIC's $250,000 cap on insured deposits rushed to withdraw their funds, which was exacerbated by the liquidity crunch facing SVB.