Legal Update

Mar 16, 2023

Silicon Valley Bank and Signature Bank

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The FDIC has statutory obligations to maximize the net present value return from the sale or disposition of the assets entrusted to it as receiver, and to minimize the amount of any loss realized.[1]  Today we examine the FDIC’s efforts to fulfill its mandate through the transfer of assets to bridge-banks, Silicon Valley Bank, N.A. (“SVB”) and Signature Bank, N.A. (“SB”).

Both bridge-banks have reopened for business under the leadership of seasoned chief executives selected by the FDIC as receiver.  Both have publicly affirmed their commitments to the safety of depositor’s accounts, and their intents to operate as going concerns.  Both were formed by transfer agreements, and remain very closely tied to the FDIC as receiver. And both bridge-banks are for sale. 

Here’s what you need to know. 

The Bridge-Banks’ Operations

SVB: On Tuesday, in a an email to customers, SVB’s CEO stated that it is “open for business” and is “making new loans and fully honoring existing credit facilities.” SVB’s CEO said the bank would “do everything we can to rebuild, win back your confidence, and continue supporting the innovation economy.” Also on Tuesday, SVB put up on its website that it’s business as usual at SVB and that SVB “is not in FDIC receivership.”[2]

SB: On Wednesday, SB announced that its opening its doors and “will continue to take care of its clients, providing a full suite of loan, deposit, and banking services” and that “[d]ue to the actions of the Federal Reserve, U.S. Treasury, and FDIC, your deposits are not at risk. The bank is running business as usual and is well-positioned to serve you."[3]

The Transfer Agreements

The FDIC transferred assets and liabilities from the failed state-chartered Silicon Valley Bank (CA) and Signature Bank (NY) from the FDIC as receiver to two newly chartered national banks, SVB and SB.[4] Under the transfer agreements, SVB and SB must provide a minimum of ninety days full service banking, unless they are sold or decide, after meeting statutory requirements, to close. The FDIC as receiver has very substantial control powers.  For instance, the FDIC can put or call assets and liabilities, has extended to the bridge bank options to reject contracts, and requires a response team to work with the receiver. The FDIC’s public disclosures[5] reflect this authority: 

A bridge bank is a chartered national bank that operates under a board appointed by the FDIC.  It assumes the deposits and certain other liabilities and purchases certain assets of a failed bank. The bridge bank structure is designed to “bridge” the gap between the failure of a bank and the time when the FDIC can stabilize the institution and implement an orderly resolution.

SVB and SB’ Assets are for Sale

Reuters reported[6] that:

  • FDIC regulators have asked banks interested in acquiring failed lenders Silicon Valley Bank and Signature Bank to submit bids by March 17, 2023.
  • This is FDIC’s (at least) second attempt at selling SVB after a failed effort on Sunday.
  • The FDIC has retained investment bank Piper Sandler Companies to run a new auction, aiming to sell both SVB and Signature in their entireties, while offering parts of the banks for sale may be considered if whole-bank sales do not happen.
  • Only bidders with an existing bank charter will be allowed to study the bridge-banks’ financials ahead of submitting their offers, a move which has the effect of giving banks an advantage over private equity firms.

If you are a Customer of SVB and SB, you Should:

  • Be aware that both bridge-banks are for sale;
  • Be aware that your banking relationship with the bridge-banks may be temporary;
  • Consider a “plan B”.

The FDIC’s efforts may result in a transfer of the bridge-banks’ assets to a new lender who will continue existing relationships. It could also result in a piecemeal sale of their assets. The market will decide the outcome. Our advice is: hope for the best, prepare for the worst. And if you are acting in a management or fiduciary role, you must consider the possible outcomes if you wish to be maximally protected by the business judgment rule. 

If You Have A Claim Against The Closed Banks:

The FDIC originally put out on its website that if the closed Silicon Valley Bank owed anyone money on the date of its closure, such creditor was required to file a claim with the FDIC for it or it would be extinguished.[7]The same for Signature Bank.[8] The bar date to file a proof of claim is (at least) 90 days from the date of the publication of the bank closure; we would utilize the closure dates in the absence of more specific information from the FDIC.[9] We are presently evaluating what, if any claims must be brought by creditors of the failed banking entities, and by when.  We will provide more information on this soon.

[1] 12 U.S.C. § 1823(d)(3)(D)(i) & (ii).






[7]; see also;;


[9] 12 U.S.C. § 2277a-10c (b)(3)(B)(i).