FDIC Plans to Try Again to Sell Silicon Valley Bank

Silicon Valley Bank may be coming up for sale again.

After failing to find a buyer for the failed bank in a Sunday (March 12) auction, the Federal Deposit Insurance Corporation (FDIC) plans to try again, The Wall Street Journal (WSJ) reported Monday (March 13), citing unnamed sources.

FDIC officials told Senate Republicans on Monday that now that regulators have said that a failure of Silicon Valley Bank would be a threat to the entire financial system — a determination that enabled FDIC to cover all depositors, including those who were uninsured — the FDIC can also offer additional incentives to potential buyers, according to the report.

It is not clear when a second auction will be held, the report said.

In the unsuccessful auction held Sunday, none of the largest United States banks made a bid, and the one offer that was made — by another institution — was rejected by the FDIC, per the report.

The auction aimed to raise enough money to repay Silicon Valley Bank’s depositors after one of the largest banking failures in U.S. history.

The United Kingdom arm of the failed bank was sold, however — for one British pound (about $1.22). The buyer, banking giant HSBC, announced the deal Monday morning.

“This acquisition makes excellent strategic sense for our business in the U.K.,” HSBC Group CEO Noel Quinn said in a press release. “It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the U.K. and internationally.”

It was reported later Monday that HSBC plans to inject $2.1 billion into Silicon Valley Bank UK to ensure that this arm of the failed bank could conduct business as usual.

In related news on Monday, President Joe Biden called for an investigation into the failures of both Silicon Valley Bank and Signature Bank.

“There are important questions of how these banks got into the circumstances in the first place,” Biden said during a brief speech on Monday. “We must get a full accounting of what happened and why those responsible can be held accountable.”

Biden also aimed to reassure Americans on Monday, saying they “can rest assured our banking system is safe. Your deposits are safe.”