The Federal Deposit Insurance Corp. plans to announce its decision to sell Silicon Valley Bank this weekend, Barron’s Advisor has learned.
A person familiar with the FDIC’s plans points out that regulators hope to come up with a resolution on the auction over the weekend.
There remain many moving parts of the auction, which the FDIC said earlier this week it would transition to a two-pronged process, one offering the core bank, which was placed under receivership and reopened as a state-controlled bridge bank, and the other limited to SVB Private, the bank’s wealth management arm, which includes its private banking operations and a number of advisors with more than $15 billion in assets under management.
“I think everyone wants to come to that conclusion,” says the person, who spoke on condition of anonymity because she wasn’t authorized to speak publicly on the subject. “I don’t think anyone would want a bridge bank to last longer than it has to.”
On Wednesday, news outlets reported that the FDIC is extending the deadline for bids for SVB Private through Friday evening, when bids are also due for the bridge bank. Earlier this week, the FDIC set Wednesday evening as the listing deadline for SVB Private.
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After bidding rounds close and before markets reopen Monday, the FDIC hopes to announce a winner, the person familiar with the plans said. The situation is so fluid that an announcement could simply trigger another extension of the bidding process, although the FDIC aims to close the process shortly.
A single sale of SVB, which holds the bank and asset units together, seems increasingly unlikely. But that’s not because of a lack of interest. In announcing the two-pronged auction process, the FDIC noted that it had seen “significant interest from multiple parties” but that “the FDIC and bidders need more time to consider all options to maximize value and an optimal outcome.” to achieve”.
Will Brown, CEO and managing partner of Formidable Asset Management, sees a number of well-funded Wall Street firms that have been either potential buyers or underwriters at SVB as potential buyers.
“Some of these admirers who looked at the whole package [such as]
JPMorgan Chase may have already performed some due diligence and remains interested in SVB Private,” Brown says. “Goldman Sachs
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is another that comes to mind given her involvement in the failed fundraising that was floated prior to the bank run.”
Goldman and JPMorgan Chase declined to comment on the matter.
Brown also has the idea that a private equity fund or hedge fund could be involved in a potential purchase, a plausible scenario for SVB Private given the heavy influx of private equity funds into the RIA space.
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Brown says the two-pronged bidding is likely to continue until the auction closes, and says a buyer for the entire venture is unlikely to emerge at this point.
“From our point of view, a deal for the entire SVB remains a low probability,” he says.
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