The US Federal Deposit Insurance Corporation (FDIC) attempted to sell Silicon Valley Bank (SVB) through an auction on March 12, 2023, but the auction failed to attract any buyers. The primary goal of this auction was to raise sufficient funds to reimburse the bank’s depositors.
The FDIC, received an offer from an institution but rejected the bid. Notably, no prominent US banks bid for Silicon Valley Bank during the auction. Despite this significant setback for the FDIC, they’re reportedly planning another auction soon; however, the precise timeline for the second sale is yet to be known.
Meanwhile, HSBC, a prominent global bank, has confirmed the purchase of Silicon Valley Bank’s UK division. According to HSBC Group CEO Noel Quinn, this acquisition has strategic significance for their UK operations as it enhances their ability to serve innovative businesses, particularly in the technology and life sciences sectors.
On March 13, 2023, Senate Republicans were notified by the FDIC that Silicon Valley Bank’s failure posed a significant risk to the nation’s financial system. This notification indicates the potential fallout that may arise from a single bank’s collapse, underscoring the interconnectedness of the financial system.
Owing to this risk, the FDIC has resolved to insure all depositors, regardless of their insurance status. This move provides assurance to depositors who may have been worried about the safety of their funds in the event of the bank’s failure. The FDIC’s decision to provide insurance to all depositors is a proactive measure to mitigate potential damage to the broader economy.
Furthermore, potential buyers now have further incentive to purchase the struggling bank, knowing that their investments will be backed by the FDIC’s insurance coverage.
On Monday, March 13, 2023, President Joe Biden promised to hold those responsible for the failures of Silicon Valley Bank and Signature Bank accountable while reassuring depositors that their money was secure and there was no need to worry about the safety of their accounts.
The FDIC is an independent government agency that protects bank depositors from losing their insured deposits in the event of a bank failure. It also provides support during financial institution bankruptcy proceedings, asset sales, and debt payments.
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