FDIC To Liquidate Securities From 2 Failed Banks

The Federal Deposit Insurance Corp. (FDIC) said Thursday it plans to sell the securities portfolios that had been held by the failed Signature Bank and Silicon Valley Bank (SVB).

In a news release, the FDIC said that, as the receiver for the two banks, it has retained BlackRock Financial Market Advisory to conduct the portfolio sales. 

The FDIC said the face values of the two portfolios are approximately $27 billion for Signature Bank’s holdings and $87 billion for SVB’s holdings. The securities consist primarily of agency mortgage-backed securities (MBS), collateralized mortgage obligations (CMO), and commercial mortgage-backed securities (CMB).

The sales “will be gradual and orderly,” the FDIC said, “and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions.”

Based in Santa Clara, Calif., SVB was the 16th largest U.S. bank when it was shut down by federal regulators on March 10. The FDIC arranged a deal with First Citizens Bank to buy SVB's deposits and loans, plus certain other assets.

Signature Bank was shut down two days later by New York State officials, due to concerns about its leadership and problems with cryptocurrency.

As receiver for Signature Bank, the FDIC has transferred all of its deposits and substantially all of its assets to Signature Bridge Bank, N.A., a full-service bank that it operates while it markets the institution to potential bidders.

Parties Interested in acquiring the securities that will be sold should contact BlackRock by email at [email protected] to obtain further information about the sale process and qualifications to participate.