The recent collapse of Silicon Valley Bank and Signature Bank, which represent the second and third-largest bank failures in US history, has reignited concerns about the impact of cryptocurrency on the financial sector. These concerns resurface in the aftermath of last year’s collapse of the cryptocurrency exchange FTX. The collapse of these major banks has raised questions about the role of cryptocurrency in these failures. With both banks having provided banking services to several cryptocurrency firms and exchanges, there are concerns about cryptocurrency’s potential impact on the financial sector’s stability. Currently, the financial industry is abuzz with news of the intense bidding war that has erupted over the acquisition of Silicon Valley Bank (SVB) and Signature Bank. The FDIC has set a deadline for Friday bids, which has sparked a frenzy of activity as top banks vie for the opportunity to acquire these coveted assets.
Regulators Have Urged Banks To Submit Bids
Sources familiar with the matter have disclosed that the U.S. Federal Deposit Insurance Corp (FDIC) has requested interested banks to submit their bids for the acquisition of failed lenders Silicon Valley Bank and Signature Bank by March 17th. The regulators have set the deadline for bids to be submitted in a bid to expedite the acquisition process.
The latest auctions illustrate the FDIC’s determined efforts to transfer the ownership of the failed lenders back to the private sector. The regulatory agency took over Silicon Valley Bank last Friday and Signature Bank on Sunday in the wake of a tumultuous weekend that has had significant ramifications throughout the worldwide financial system.
The FDIC will make a second attempt to sell Silicon Valley Bank (SVB) after an unsuccessful bid on Sunday. To facilitate the new auction, the FDIC has enlisted the services of investment bank Piper Sandler Companies (PIPR.N).
The regulatory agency has expressed its intention to sell both SVB and Signature Bank as complete entities, but partial offers may be considered if the sale of the entire banks does not materialize, according to two of the sources.Â
Signature Bank’s Potential Buyers Must Divest All Crypto Business
As per sources, the FDIC has mandated that only bidders possessing an existing bank charter will be permitted to review the financials of the failed lenders before presenting their offer. This measure has been implemented to provide conventional lenders with an edge over private equity firms.
Furthermore, any prospective buyer of Signature Bank will be required to divest all crypto-related operations at the bank, as per the sources.
Sources familiar with the matter have chosen to remain anonymous as the issue is confidential. The FDIC has declined to comment on behalf of both Silicon Valley Bank (SVB) and Signature Bank. Piper Sandler and Signature Bank have yet to respond to requests for comments.
President Joseph Biden has declared that the American taxpayers will not be liable for rescuing SVB and Signature Bank, as any capital deficiencies would be remedied through a government fund that can impose a tax on other banks. However, the successful sale of the failed lenders will mitigate such deficits.
The collapse of banks that provide banking services to the crypto industry is not a new phenomenon. In recent months, several central banks have cut ties with cryptocurrency firms, citing concerns over regulatory compliance and money laundering risks. This has resulted in a lack of banking services for many crypto firms, making it difficult for them to operate and grow.
The crypto industry is closely watching the bidding war for SVB and Signature Bank. It remains to be seen which bank will emerge victorious in the bidding war and what the implications of the acquisition will be for the crypto industry.
