It's unclear how much of the 24/7 news cycle has been devoted to the SVB and Signature Bank receiverships, with the added news about reverberations in Europe. Let's just say: a lot.

We're working very closely with our clients to address current challenges and to consider longer-term issues as the smoke clears. We also continue to track recent developments and to provide timely thought pieces on these matters in real time. Case in point: In this week's Cabinet News and Views, we address SVB and Signature in a couple of our articles, and you can find additional information by visiting our Financial Markets Resource Center.

There are several other news items worth reading this week, including  some ESG-related climate news items. 

As always, please reach out here if there’s anything on your mind.   

Daniel Meade 
Partner and Editor, Cabinet News and Views

By Daniel Meade

Partner | Financial Regulation

As we have previously discussed, after the failure of Silicon Valley Bank (“SVB”), the FDIC is operating the Silicon Valley Bridge Bank, N.A. (“Bridge Bank”) in many ways as if it’s business as usual to help preserve as much value as it can for the resolution of SVB. Given the speed of SVB’s failure, the FDIC did not have the time it usually does to arrange for the sale of assets and assumption of deposits that you typically see on a Friday evening when a bank is usually closed. Numerous press outlets reported that the FDIC did not obtain adequate bids on the first weekend after the closure of SVB. 

This past Monday, the FDIC announced that it was extending the bid window for the Bridge Bank. Rather than just accepting bids for all or substantially all of the Bridge Bank, “the FDIC will allow parties to submit separate bids for [the Bridge Bank] and its subsidiary Silicon Valley Private Bank.” The FDIC also noted that “[b]ank and non-bank financial firms will be permitted to bid on the asset portfolios.” Bids for the private bank sub were due Wednesday night, and bids for the Bridge Bank are due tomorrow (Friday, March 24) by 8:00 p.m. EDT. 

The extension of the bid window suggests that the FDIC has not found a solution that it deems adequate. It also suggests that while the FDIC’s hope may have initially been to have a whole-bank purchase, the FDIC may be coming to a realization that selling the Bridge Bank in pieces may bring more value to the resolution of SVB. 

This Clients & Friends Memo provides a general overview of the SVB Financial Group chapter 11 case, the first day hearing, and certain issues that may arise in connection with the bankruptcy proceedings. The memo highlights potential complications that may arise among SVB Financial Group (the Debtor), the Bridge Bank, and the FDIC, particularly due to the interrelatedness of the Bridge Bank and SVB Financial Group.

Read it here.

By Daniel Meade

Partner | Financial Regulation

The Federal Reserve Board (“FRB”) announced last Sunday that it was coordinating with the Bank of Canada, Bank of England, Bank of Japan, the European Union Central Bank, and the Swiss National Bank to “enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.” The coordinated actions will mostly be through daily operations of the various swap lines instead of the weekly frequency before this announcement. 

Since 2013, the central banks noted above have engaged in coordinated standing swap line arrangements. Before that, central banks would have individual bilateral agreements. The announcement stated that “[t]he network of swap lines among these central banks is a set of available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.”

Banks in the United States have seen tangible liquidity challenges for at least the last two weeks. Some of that stress (for apparently different reasons) has reared its head in Europe. As the U.S. Dollar is generally viewed as the reserve currency of the world, this coordinated action by these central banks is a concerted effort to mitigate any U.S. Dollar liquidity challenges across the globe.