© Reuters. FILE PHOTO: People collect exterior of the Silicon Valley Bank (SVB) headquarters in Santa Clara, California, U.S. March 10, 2023. REUTERS/Nathan Frandino/File Photo
By Kanjyik Ghosh
(Reuters) -U.S. regulators are contemplating retaining possession of securities owned by Signature Bank (NASDAQ:) and Silicon Valley Bank to permit smaller banks to take part in public sale for the collapsed lenders, a supply accustomed to the matter mentioned on Friday.
The transfer by Federal Deposit Insurance Corp (FDIC) is aimed toward facilitating takeovers of the banks and to widen the pool of bidders, whereas making certain that bigger banks will not be discouraged from bidding, the supply mentioned.
Many of the fastened earnings securities that SVB and Signature Bank invested in, similar to Treasuries, have been price much less for the reason that Federal Reserve raised rates of interest. The FDIC retaining these securities would be certain that acquirers do not need to guide a loss on them.
Signature Bank and Silicon Valley Bank didn’t instantly reply to Reuters requests for remark. The FDIC declined to remark.
Bloomberg News first reported the transfer on Friday and mentioned that the quantity coated at Signature might vary from $20 billion to $50 billion, whereas for Silicon Valley Bank it might be between $60 billion and $120 billion.
Reuters on Wednesday reported that regulators on the FDIC have requested banks in buying SVB and Signature Bank to submit bids by March 17.
A weekend motion launched by the FDIC to promote SVB failed final Sunday after main banks balked at finishing up such a dangerous deal in a brief period of time.
SVB Financial Group, the dad or mum firm of Silicon Valley Bank, earlier on Friday filed for a court-supervised reorganization beneath Chapter 11 chapter safety.