Silicon Valley Bank Sale Process Evolving in Unusual Direction
Having failed to quickly find a buyer for the assets and deposits of the newly created Silicon Valley Bank, N.A., Santa Clara, California (SVB), the FDIC has announced that it will expand the bidding process in the hopes of maximizing the value it can obtain from a sale. Now, non-banks will have the unusual opportunity to acquire assets from SVB.
Washington, D.C. (March 20, 2023) – Having failed to quickly find a buyer for the assets and deposits of the newly created Silicon Valley Bank, N.A., Santa Clara, California (SVB), the FDIC has announced that it will expand the bidding process in the hopes of maximizing the value it can obtain from a sale. Now, non-banks will have the unusual opportunity to acquire assets from SVB.
The FDIC will allow qualified insured banks and, in another atypical step, allow qualified insured banks in partnership with non-bank partners to submit separate bids for SVB and its wealth management subsidiary, Silicon Valley Private Bank. The FDIC is allowing insured banks to team with non-bank partners to submit whole-bank bids, or bids on the deposits or assets. Additionally, non-bank financial firms will be allowed the opportunity to separately bid on the asset portfolios.
Bids for the Silicon Valley Private Bank are due by 8:00 P.M. EDT on March 22, 2023, and bids on SVB are due by 8:00 P.M. EDT on March 24, 2023.
On March 19, 2023, the FDIC announced that it had entered into an agreement to sell some of the assets from its newly created Signature Bank, N.A. (Signature) to Flagstar Bank, N.A. Not all of Signature’s loans were included in the sale of assets, and about $13 billion in loans were sold at a discount of $2.7 billion. Although the asset portfolio of SVB differs from that of Signature Bank, a precedent has been set to consider a discounted asset sale, that could be relied upon for SVB, especially if the SVB assets include several billion dollars of higher risk loans to startups. This may create opportunities for asset purchasers to buy SVB assets at a discount.
Lewis Brisbois continues to advise clients as to how best to deal with the disruption in financial markets, particularly as it relates to decisions involving troubled institutions.
Lewis Brisbois has formed a Bank Default Response Team led by Washington, D.C. Partner and former General Counsel of the FDIC Thomas A. Brooks. This Response Team also includes several seasoned lawyers who represent clients in in the banking, bank regulatory, securities, workouts, lending, bankruptcy, real estate, healthcare, and start-up industries. Please contact Mr. Brooks or Los Angeles Partner Alexis Crump for further information and to be connected with the appropriate Bank Default Response Team Member. Visit our Banking & Finance Practice page to learn more about the firm’s capabilities in this area.
Author:
Thomas A. Brooks, Partner
Editors:
Alexis Crump, Partner
Jane C. Luxton, Managing Partner - Washington, D.C.
Bank Default Response Team:
Thomas A. Brooks, Partner
Alexis Crump, Partner
Andrew Pidgirsky, Partner
Wade A. Houser, Partner
Jane C. Luxton, Managing Partner - Washington, D.C.
Sean P. Shecter, Partner
Steven H. Lee, Partner
Paul W. Kisslinger, Partner
Rafael X. Zahralddin, Partner
Vincent F. Alexander, Partner