BAC - FDIC willing to talk loss-sharing to smooth sale of SVB Signature Bank - report

2023-03-17 15:33:50 ET

The Federal Deposit Insurance Corporation is now open to discuss shouldering losses at failed lenders Silicon Valley Bank ( NASDAQ: SIVB ) and Signature Bank ( NASDAQ: SBNY ), the Financial Times reported Friday, citing people familiar with the matter.

The agency's willingness for a loss-sharing deal comes a week after it ruled out any such arrangement when it attempted and failed to auction off SVB ( SIVB ) last weekend. JPMorgan Chase ( JPM ) and Bank of America ( BAC ) reportedly turned down opportunities to acquire SVB before the bank was seized last week.

A sale of either bank would require the new buyer to mark the price of certain assets to fair value, in a move that could potentially trigger immediate losses. The FDIC has not given bidders any signal on the size of losses it would be considering to backstop, the people told the FT .

“We are actively marketing both institutions,” a spokesman for the FDIC told the FT . “We haven’t set a deadline for bids, but we hope to have them resolved within a week.”

More coverage on the bank crisis:

First Republic Bank sinks after suspending dividend following bank support

President Biden urges Congress to impose stiffer penalties on execs of failed banks

Bill Ackman flags contagion risks from $30B rescue deal for First Republic

SVB Financial initiates Chapter 11 proceeding for value preservation

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