JP Morgan Among Top Banks In A Race To Acquire Silicon Valley Bank, But There Is A Catch

Silicon Valley Bank Financial Group, the parent company of Silicon Valley Bank, is currently the subject of buyout talks with companies such as JPMorgan Chase & Co. and PNC Financial Service Group Inc. among those expressing their interest. However, as part of the acquisition deal, the companies plan on excluding the commercial banking entity, Silicon Valley Bank, whose closure led to market upheaval and the depeg of stablecoins and which is currently under the control of the US government.

@jpmorgan Among Big Banks In A Bid To Acquire #SiliconValleyBank – Source Coingape

— ErmoFi (@ErmofiNews) March 13, 2023

The three remaining entities, SVB Private, SVB Capital, and SVB Securities, are smaller than the commercial bank entity as denoted by the company’s 10-k report. Despite their size, bidders are hoping to stabilize and save these divisions from the impact of the collapse of the bank entity. 

Other companies that have joined the bid include Morgan Stanley and Apollo Management as the U.S. Federal Deposit Insurance Corporation (FDIC) gave the deadline of Sunday afternoon by which all interested buyers should have submitted their bids. Furthermore, the possibility of a government subsidy to save SVB was ruled out by U.S. Treasury Secretary Janet Yellen.

Treasury Secretary Janel Yellen says "no bailout" for #SilconValleyBank so equity holders will be wiped out. Efforts to protect depostiors are another matter, as contagion danger could pressure other regional banks. https://t.co/APpo1WDBRS pic.twitter.com/7umlekA3vl

— Gary Kim (@garykim) March 12, 2023

Given that SVB had branches in other countries, UK institutions including the Bank of London and HSBC made their acquisition offers for Silicon Valley Bank UK on Sunday. However, according to the latest developments, the Bank of England and the government decided on a private sale of Silicon Valley Bank’s UK subsidiary to HSBC, as Jeremy Hunt, Britain’s finance minister, added that “Deposits will be protected, with no taxpayer support.”

This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC

Deposits will be protected, with no taxpayer support

I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise

— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023

VCs and Investors support Slicon Valley Bank

As the 16th biggest bank in the United States, Silicon Valley Bank served as the financial hub for numerous Silicon Valley startups, crypto companies, and venture capital firms. According to reports, its demise a few days ago was the biggest failure of a U.S. bank since the 2008 financial crisis.

However, in an effort to minimize the effects of the bank’s failure and prevent the possibility of extinction for tech companies as well as startups, more than 100 venture capital(VCs) and investment firms have signed a statement supporting Silicon Valley Bank. The group of companies stated:

In the event that SVB were to be purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.

Several VC leaders met today to discuss the aftermath of SVB’s downfall. This is a joint statement from all of us. @Accel @altcap @BCapitalGroup @generalcatalyst @eladgil @GreylockVC @khoslaventures @kleinerperkins @lightspeedvp @MayfieldFund @Redpoint @RibbitCapital @upfrontvc pic.twitter.com/7OtHq0zwT1

— Hemant Taneja (@htaneja) March 11, 2023

Nonetheless, the collapse of SVB leaves the crypto industry unbanked as the top three crypto-friendly banks, Silvergate Bank and Signature Bank in addition to SVB, have all been closed by US regulators. This has definitely shaken the crypto market with multiple stablecoins ending up depegged as a result of their reserves being held by the banks as in the case of USDC, or due to their relation to other stablecoins as is the case for DIA, FLAX, and USDD.

The domino effect has led to investors and crypto firms converting their stablecoins to other cryptocurrencies such as BTC and ETH. Binance for instance concluded its conversion of the remaining Binance USD (BUSD) in its  Industry Recovery Initiative into Bitcoin (BTC), BNB, and Ethereum (ETH).

Given the changes in stable coins and banks, #Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH. Some fund movements will occur on-chain. Transparency.

— CZ 🔶 BNB (@cz_binance) March 13, 2023

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