Methods for expanding participation from nonbanks in buying the assets of failed banks – such as those that went belly up in 2023 and 2024 — will be tested early next year, the acting board chairman for the federal bank deposit insurance agency said Wednesday.
Speaking to the Single Resolution Mechanism’s 10th Anniversary Conference in Brussels, sponsored by the Single Resolution Board (SRB), Federal Deposit Insurance Corp. (FDIC) Acting Board Chairman Travis Hill asserted that nonbanks control “substantial pools of capital that can be deployed to bid on assets of failed institutions and can be used in partnership with banks to bid on entire institutions.”
Hill said his agency has developed a “a pre-qualification process” for nonbank bidders of failed banks, with the intent of qualifying nonbank bidders in advance of any offering.
He said the FDIC would pilot the qualification process with bidders who participated in the process for the April 2024 failure of Republic First Bank and the 2023 asset sales following the failure of Signature Bank. He indicated other nonbank firms that have expressed interest in pre-failure loan sales would participate.
Hill said the pilot starts in January 2026; it will be revised based on feedback. ”The FDIC expects to publicly release the pre-failure qualification process and application after receiving feedback from the pilot program,” Hill said.
The acting chairman explained that the FDIC is including nonbank bidders “to increase competition by including private equity firms and other nonbank entities in the marketing process, and thereby ultimately reduce costs to the DIF (deposit insurance fund).
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