- 1 The prospective buyer of Signature bank needs to stay away from doing any business related to crypto, according to a report.
- 2 The FDIC has asked interested banks to submit bids by Friday for acquiring Signature bank and SVB.
Signature bank (SBNY.O), the crypto-linked bank, is now ready to go under the roof of another owner after the collapse. According to a report, the Federal Deposit Insurance Corporation (FDIC) has asked the interested buyers to acquire the crypto bank.
Signature Bank is ‘Up’ for Sale
Late Sunday, Signature bank closed by the state regulators and now the potential buyer for the bank “has to agree to a major caveat: no crypto.” The closure of Signature bank came just two days after the collapse of California-based Silicon Valley bank (SVB), and less than a week after the Silvergate bank collapsed. Notably, all three banks were known as being crypto-linked financial institutions.
On March 15, Reuters reported that the regulators of the U.S. FDIC had asked interested banks to acquire Signature bank and also SVB. Regulators said the interested banks need to submit their bids by March 17, Friday. This effort by FDIC indicates that they are working to return the collapsed firms to the private sector. This decision came out amid a weekend of turmoil that has reflected through the global financial system.
Notably, this was the second attempt by FDIC for selling SVB as it failed on Sunday for doing the same. Since then, the regulators reportedly retained an investment bank Piper Sandler Companies (PIPR.N) to execute the new auction. However, FDIC is ready to sell both SVB and Signature in its entirety. Also, “offering for parts of the banks could be considered if whole company sales do not happen.”
Furthermore, the eligibility for the purchase of these banks is decided. As “only bidders with an existing bank charter will be allowed to study the banks’ financials ahead of submitting their offer.” This move by regulators seemed like giving traditional lenders an advantage over private equity firms.
Specifically for Signature bank buyers, they are required to “give up all the crypto business at the bank.” The sources requested anonymity as the matter is confidential. Over this whole source report, the FDIC declined to comment, both on its own behalf and for SVB. While Signature and Piper Sandler also stood aside and did not make any comment.
The U.S. President Joe Biden further said “U.S. taxpayers will not bear the cost of salvaging SVB and Signature bank. As any capital shortfalls would be covered by a government fund which can place levy on other banks.” On the other hand, if the sales of these banks goes well, then it would help minimize similar shortfalls.
The New York financial regulator said on March 14, that Signature Bank was shuttered due to “a significant crisis of confidence in the bank’s leadership.” Late in September nearly a quarter of Signature banks’ deposits came from the crypto industry.
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