US authority will divide Silicon Valley Bank to sell its private unit separately

The Federal Deposit Insurance Corporation (FDIC) decided on Monday to split the Silicon Valley Bank (SVB) and holding two separate auctions for its traditional depository unit and its private bank, after failing to find a buyer for the failed lender last week.

Until March 22, it will seek offers for the Silicon Valley Private Bank and until two days later for the bridge bank. The private bank, which is part of SVB’s retail operations, is aimed at high net worth individuals.

The asset portfolios will be open to bids from banking and non-bank financial companies, according to the regulator.

Last week, some sources told Reuters that the FDIC was planning to relaunch the SVB sale process, with the regulator looking at a possible spin-off of the failed lender.

The parent company of lender SVB Financial Group filed for a reorganization under Chapter 11 bankruptcy protection on Friday and was seeking buyers for its assets after measures to shore up investor confidence failed.

The FDIC, which insures deposits and handles bankruptcies, had informed banks that bid in the SVB and Signature Bank it was considering the possibility of retaining some of the undervalued assets.

Reuters reported on Sunday that efforts by some regional US banks to raise capital and allay fears about their health are running up against potential buyers and investors worrying about looming losses on their assets.

The run on the bank was sparked by balance sheet concerns after the lender sold a portfolio of Treasury bonds and mortgage-backed securities to Goldman Sachs with a loss of 1.8 billion dollars and then tried to plug that hole by raising funds of 2.25 billion dollars.

rrg