According to an article published by The Wall Street Journal, United States officials including the FDIC are making a second effort to find a buyer for the recently defunct bank, which could result in Silicon Valley Bank (SVB), once an important company partner for venture-backed companies, going back up for auction.
The Federal Deposit Insurance Corporation (FDIC) informed Republican Senators that they were granted more freedom to sell the bank after authorities deemed the SVB collapse to be a threat to the financial system.
On March 11, a day after the bank’s liquidation, the regulators made their initial effort at an auction of the failed institution. Major U.S. banks apparently made no offers at the weekend auction. However, there had been at least one proposal from a different institution, but the FDIC rejected it.
FDIC’s Takeover of SVB
The Journal claims that since SVB has been deemed “systemic,” the FDIC is now free to provide incentives to prospective buyers of the company, including huge deficit deals. The second auction’s schedule, however, has not yet been determined.
The Federal Deposit Insurance Corporation (FDIC) is an autonomous government organization that was established to safeguard bank depositors from losing their insured deposits in the event that a bank fails. The FDIC also assists with the institution’s bankruptcy process, the sale of assets, and the payment of debts.
Significantly, SVB was shut down on March 10 by the California Department of Financial Protection and Innovation. Moreover, the Silicon Valley Bank branch in the United Kingdom (SVB U.K.) has recently ceased operations due to the Bank of England (BoE) alleging a “limited presence” and lack of “critical functions” sustaining the financial system.
The second-largest banking collapse since 2008, the SVB collapse, comes after Silvergate, another significant player, which said it was voluntarily ceasing operations and liquidating its bank.