SVB Financial Group Unveils Plan To Sell Its Investment Banking Division
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SVB Financial Group has announced a plan to sell its investment banking division known as SVB Securities. SVB Securities will be sold to a group that is led by Jeff Leerink, with the funds backing the group being managed by The Baupost Group.
SVB Financial Group to sell its investment banking division
The bidder group is being led by Leerink, who currently operates as the Chief Executive of SVB Securities. This bidder group will close the acquisition of this investment banking business by combining cash, and repayment of the intercompany note, while also installing a 5% equity instrument.
The research business owned by the company known as MoffettNathanson LLC was not part of the recently announced transaction, according to the failed lender. The company has also added that the research business will remain part of the company.
This deal also comes after the Federal Deposit Insurance Corporation (FDIC) took over the operation of Silicon Valley Bank in March. The bank’s collapse was triggered by a run on deposits as depositors rushed to withdraw their money from the bank. The massive deposit outflows from the bank wiped out over half of the market value of several regional lenders in the United States.
The collapse of Silicon Valley Bank marked the worst banking crisis in US history since the 2008 incident. The loans and the deposit of the failed bank were purchased by First Citizens BancShares Inc in March. The move also left around $90 billion worth of securities with the FDIC for the regulator to sell.
The failed bank has also continued to conduct an evaluation of the strategic alternatives for its division known as CVB Capital. The other assets and investments that are owned by the company are also being evaluated.
The collapse of Silicon Valley Bank happened in March, and the effects were felt globally. The collapse shook the US banking industry, with the depositors in US banks running away from smaller lenders to larger institutions. The collapse also happened at around the same time when Credit Suisse was forced to be part of UBS through an acquisition.
Silicon Valley Bank is also expanding to the UK
Silicon Valley Bank is expanding its operations to the United Kingdom following a deal with HSBC. HSBC announced last week that it would set up the HSBC Innovation Banking division that will integrate Silicon Valley Bank UK and launch innovation teams across Hong Kong, Israel, and the US.
HSBC purchased the UK division of Silicon Valley Bank for £1. While the collapse of the bank definitely had an impact on the broader banking industry, it appears that the issues appear to have been settled. However, regulators are yet to lessen their grip over the banking industry.
Three weeks ago, the Chairman of the G20 Financial Stability Board, Klaas Knot, said that a comprehensive review of the situation around Silicon Valley Bank, Credit Suisse, and the broader banking industry would be conducted.
