# Exclusive-U.S. regulator seeks sale of Silicon Valley Bank, Signature Bank portfolios-sources
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-31
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: FDIC to sell portfolios from failed Silicon Valley and
Meta Description: FDIC is selling low-yielding assets rejected by new owners of Silicon Valley Bank and Signature Bank. Face value of portfolios estimated at $90 billion and $26
URL: https://financedigest.com/exclusive-u-s-regulator-seeks-sale-of-silicon-valley-bank-signature-bank-portfolios-sourceshtml

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By David French and Pete Schroeder

NEW YORK/WASHINGTON (Reuters) – The Federal Deposit Insurance Corporation (FDIC) has retained advisers to sell the securities portfolios that the new owners of failed Silicon Valley Bank and Signature Bank rejected, according to people familiar with the matter.

The portfolios are comprised of low-yielding assets, such as Treasuries and U.S. government agency-backed securities, that the two regional [banks amassed while interest rates were close](https://www.financedigest.com/banking-stability-worries-go-behind-closed-doors-at-imf-world-bank-meetings.html "Banking stability worries go behind closed doors at IMF-World Bank meetings") to zero.

If First Citizens Bancshares Inc, the new owner of [Silicon Valley Bank](https://www.financedigest.com/hsbc-acquires-british-arm-of-stricken-silicon-valley-bank.html "HSBC acquires British arm of stricken Silicon Valley Bank"), or New York Community Bancorp Inc, which acquired Signature Bank, had assumed the assets, they would have had to realize losses given that interest rates are now much higher than the yield of these assets.

Silicon Valley [Bank’s and Signature Bank’s securities portfolios carry a face value of around $90 billion](https://www.financedigest.com/20-billion-in-bank-service-fees-are-you-overpaying.html " Billion in Bank Service Fees: Are You Overpaying?") and $26 billion, respectively, according to regulatory filings and statements by government officials.

The [sources spoke on condition of anonymity to discuss confidential information about the sale](https://www.financedigest.com/monte-dei-paschi-to-have-underwriting-consortium-for-share-sale-by-tuesday-source.html "Monte dei Paschi to have underwriting consortium for share sale by Tuesday – source") process. The FDIC declined to comment.

It is unclear how much the FDIC’s deposit fund stands to [lose on the sale](https://www.financedigest.com/ben-jerrys-loses-bid-to-halt-sales-in-west-bank.html "Ben & Jerry’s loses bid to halt sales in West Bank") of the portfolios. The fund, used to guarantee deposits at failed lenders, is replenished by a levy on all U.S. [banks that are members of the FDIC’s deposit insurance](https://www.financedigest.com/swiss-regulator-monitoring-banks-and-insurers-after-svb-collapse.html "Swiss regulator monitoring banks and insurers after SVB collapse") scheme.

The FDIC estimates the [sale of Silicon Valley Bank](https://www.financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetite.html "Stocks rise after bank sale fuels investor risk appetite") and Signature Bank will cost the deposit fund $20 billion and $2.5 billion, respectively. It will release [final figures](https://www.financedigest.com/french-inflation-revised-upwards-in-february-to-7-3-final-figures.html "French inflation revised upwards in February to 7.3% – final figures") once sales of the loan books of the banks and their securities portfolios are complete.

Some of the loans were passed on to First Citizens and New York Community with backstops from the FDIC, while others are up for sale separately. The FDIC has hired Newmark Group Inc to sell about $60 [billion of Signature Bank’s](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse  billion lifeline offers limited respite to global banks") loans it retained, Reuters reported this week.

[Silicon Valley Bank](https://www.financedigest.com/kpmg-stands-by-audits-of-silicon-valley-bank-and-signature-bank-ft.html "KPMG stands by audits of Silicon Valley Bank and Signature Bank – FT") gave a sense of the potential losses in its securities portfolio on March 8, two days before it failed, when it sold $21.5 billion of it to meet customer withdrawals, realizing a $1.8 billion loss. The portfolio was yielding an average 1.79%, far below the 10-year [Treasury yield](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") that at the time was around 3.9%.

(Reporting by David French in New York and Pete Schroeder in Washington, D.C.; Editing by Edwina Gibbs)


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