SVB Agrees to Sell its Investment Banking Division – SVB Financial Group announced on Sunday that it has reached an agreement to sell its investment banking division, SVB Securities, to a group headed by Jeff Leerink and supported by funds managed by The Baupost Group.
Under the terms of the deal, the group led by Leerink, who serves as the CEO of SVB Securities, will acquire the investment banking business using a combination of cash, repayment of an intercompany note, and a 5% equity instrument, as stated by the company. According to the struggling financial institution, the sale transaction did not include MoffettNathanson LLC, the company’s research business, and it will continue to be a part of the company.
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This agreement follows the intervention by the Federal Deposit Insurance Corporation (FDIC) in March, when it assumed control of Silicon Valley Bank due to a bank run caused by depositors hastily withdrawing their funds. This run resulted in a significant decline in the market value of various regional U.S. lenders and led to the most severe banking crisis since 2008.
In March, First Citizens BancShares Inc acquired all the loans and deposits of the failed bank, while approximately $90 billion in securities were retained by the FDIC for future sale. The lender stated that it is currently assessing strategic options for its division, SVB Capital, as well as the company’s other assets and investments.
The impact of SVB’s collapse in March had far-reaching consequences, causing depositors in the United States to withdraw their funds from smaller banks and seek refuge in larger institutions. The loss of confidence also led to Credit Suisse being acquired by rival UBS.