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The Federal Deposit Insurance Corp. is planning to announce its decision on the sale of Silicon Valley Bank this weekend, Barron’s Advisor has learned.
A person familiar with the FDIC’s plans indicates that the banking regulator hopes to present a resolution of the auction over the weekend.
There remain many moving parts to the auction, which the FDIC earlier this week said it was shifting to a two-track process, one offering the core bank, which has been placed into receivership and reopened as a federally controlled bridge bank, and the other limited to
SVB
Private, the bank’s wealth management arm that includes its private-banking operations and a stable of advisors with more than $15 billion in assets under management.
“I think everybody’s aspiration is to conclude this,” says the person, who spoke on condition of anonymity because they were not authorized to speak publicly on the topic. “I don’t think anyone wants a bridge bank to linger longer than it has to.”
On Wednesday, news outlets reported that the FDIC was extending the deadline for bids for SVB Private until Friday evening, when bids are also due for the bridge bank. Earlier this week, the FDIC had set Wednesday evening as the bidding deadline for SVB Private.
After the rounds of bidding conclude, and before markets reopen on Monday, the FDIC hopes to announce a winner, the person familiar with the plans said. The situation is fluid enough that an announcement could simply entail a further extension of the bidding process, though the FDIC is aiming to wrap up the process in short order.
A single sale of SVB that keeps the bank and wealth units together looks increasingly unlikely. But that’s not for lack of interest. The FDIC noted in announcing the two-track auction process that it had seen “substantial interest from multiple parties,” but that “FDIC and the bidders need more time to explore all options in order to maximize value and achieve an optimal outcome.”
Will Brown, CEO and managing partner of Formidable Asset Management, looks to some deep-pocketed Wall Street firms who have already been involved with SVB, either as a potential acquirer or underwriter, as potential buyers.
“Some of those suitors who looked at the whole package, [such as]
JPMorgan Chase
,
may have already performed some of the due diligence and remain interested in SVB Private,” Brown says. “
Goldman Sachs
is another that comes to mind, given their involvement in the failed capital raise floated before the run on the bank.”
Goldman and JPMorgan Chase declined to comment on the matter.
Brown also floats the idea that a private-equity fund or a hedge fund could be involved in a potential purchase, a plausible scenario for SVB Private given the heavy inflow of private-equity funding into the RIA space.
Brown says the two-track bidding is likely to continue until the conclusion of the auction, saying it is unlikely at this point that a buyer for the entire entity will emerge.
“A deal for the whole of SVB remains, in our opinion, a low probability,” he says.
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