After chaotic days under the media spotlight, the Federal Deposit Insurance Corporation (FDIC) decided to split Silicon Valley Bank (SVB), offering the traditional deposit-taking unit and the private bank in two separate auctions.
The move is intended to make it easier to find buyers, after failing to find a buyer for last week’s ruling.
According to the regulator, the asset portfolios will be open to bids from bank and non-bank financial companies.
In previous days, the parent company of lender SVB Financial Group filed for reorganization under Section 11 bankruptcy protection and was seeking buyers for its assets after negotiations to try to regain investor confidence failed.
In the meantime, the FDIC considered retaining some of the undervalued assets.
Reuters reported that some of the U.S. regional banks, in an effort to raise capital and avoid any concerns from their clients, have faced concerns from potential buyers as well as investors due to possible losses on their assets.
Simply put, the climate of turmoil and volatility impacts the perception of customers and investors. Behavior that translates into financial destabilization.
Finally, Mexico’s El Economista noted that the run on the bank occurred because of balance sheet concerns after the lender sold a portfolio of treasury bonds and mortgage-backed securities to Goldman Sachs at a loss of US$1.8 billion.
A failure it attempted to cover through a $2.25 billion fundraising.