FDIC to break up SVB, seeks separate sale of private entity

March 20 (Reuters) – The Federal Deposit Insurance Corporation decided on Monday to break up Silicon Valley Bank (SVB) and hold two separate auctions for its traditional deposit unit and its private bank after failing to find a buyer for the failed lender last week .

It will seek bids for Silicon Valley Private Bank until March 22 and for the bridge bank until March 24. The private bank, which is located within SVB̵[ads1]7;s retail business, is aimed at people with a high net worth.

Banks and non-bank financial institutions will be allowed to bid for the asset portfolios, the regulator said.

First Citizens BancShares Inc ( FCNCA.O ), one of the biggest buyers of failed U.S. lenders, has made a bid for all of Silicon Valley Bank, a source with knowledge of the matter said. If the FDIC decides to accept bids for parts of SVB, First Citizens also expects to bid. Bloomberg previously reported their interest in SVB.

First Citizens said in a statement that it “does not comment on market rumors or speculation.”

Last week, sources told Reuters the FDIC planned to relaunch the sale process for SVB, with the regulator seeking a potential resolution of the failed lender.

The parent company of lender SVB Financial Group had filed for reorganization under Chapter 11 bankruptcy protection on Friday and sought buyers for its assets after measures to bolster investor confidence failed.

The FDIC, which insures deposits and administers receipts, had informed banks considering bids in the auctions for SVB and Signature Bank ( SBNY.O ) that it was considering keeping some of the assets that are under water.

Reuters reported on Sunday that efforts by some U.S. regional banks to raise capital and allay fears about their health are running up against concerns from potential buyers and investors about looming losses in their assets.

The run on the bank was sparked by balance sheet concerns after the lender sold a portfolio of government bonds and mortgage-backed securities to Goldman Sachs ( GS.N ) at a loss of $1.8 billion and then sought to plug the hole through a $2.25 billion fundraising . .

Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur and Nick Zieminski

Our standards: Thomson Reuters Trust Principles.

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