SVB collapse: FDIC to liquidate Silicon Valley and Signature bank securities

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by Misty Severi at

The Federal Deposit Insurance Corporation announced on Wednesday that it was retaining a financial adviser to oversee the liquidation of approximately $114 billion in securities from the former Signature and Silicon Valley banks.

The FDIC said on its website that it had retained BlackRock Financial Market Advisory to sell the securities portfolios. The face values of the portfolios were approximately $27 billion for Signature Bank and $87 billion for Silicon Valley Bank.

The securities primarily comprise agency mortgage-backed securities, collateralized mortgage obligations, and commercial mortgage-backed securities, the regulators said.

Silicon Valley Bank was the 16th largest federally insured bank when it was closed by regulators last month. The bank was closed after its attempts to raise capital failed. The bank’s failure was one of the largest since 2008. The Federal Reserve has launched a review of the oversight and regulation of the bank. It will be publicly released on May 1.

The collapse of Silicon Valley Bank will cost nearly $20 billion of the FDIC’s insurance fund, which was established alongside the FDIC in 1933 in the wake of the Great Depression.

The fund has served to insure the deposits of U.S. citizens and maintain faith in the financial system. It derives its funds from insurance premiums and interest from U.S. government obligations.

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