Buying assets from the FDIC

Following the FDIC's appointment as receiver for Silicon Valley Bank and Signature Bank in mid-March 2023, institutional investors and alternative asset managers face structured opportunities to acquire failed bank assets through multiple channels governed by federal least-cost resolution requirements. The FDIC's statutory mandate requires it to resolve failed banks using methods that minimize costs to the Deposit Insurance Fund, which is supported by quarterly assessments on all insured banks and covers depositor claims.

The FDIC pursues three primary resolution strategies. The preferred method is a whole bank purchase-and-assumption (P&A) transaction, where a financially healthy acquiring institution assumes all deposit liabilities—including uninsured deposits in SVB and SB cases due to systemic risk determinations—and acquires the failed bank's asset base. This approach ensures immediate deposit availability and preserves customer relationships without cost-multiplying disruption. Alternative paths include liquidation (issuing insured deposit checks and conducting asset sales) and insured deposit transfers (where the FDIC transfers only insured deposits to another institution while conducting separate asset sales). All third-party transactions are subject to structured bidding processes designed to demonstrate least-cost positioning relative to alternatives.

For loan acquisitions, the FDIC employs sealed-bid mechanisms through four designated advisors: First Financial Network, Mission Capital Advisors, Newmark Knight Frank, and The Debt Exchange. Loans are marketed individually or pooled by shared criteria—loan size, performance status, collateral type, and geographic location—based on bidder preferences, though final sales remain open to all qualified bidders. Critically, the FDIC provides no representations, warranties, or recourse beyond terms specified in standardized Loan Sale Agreements; all asset risk transfers to the buyer. Typical loan sale closings occur within 20 business days.

Beyond loan portfolios, the FDIC sells debt securities, equity interests, mortgage servicing portfolios, shared national credits, and structured joint venture transactions. Structured Transactions are particularly relevant for larger portfolios: the FDIC forms an LLC, contributes assets, and retains an equity stake while a winning bidder typically acquires 20-40 percent equity and manages operations on a leveraged or unleveraged basis. Prospective bidders must complete pre-qualification certification and establish accounts with loan sale advisors. The pre-qualification process requires submission of Purchaser Eligibility Certification forms, Contact Information, and transaction-specific qualification materials, with renewal required every six months for securities sales. Bidders are directed to contact the FDIC's Asset Marketing Section or [email protected] to initiate the process.