Bartis HK - The FDIC sells $16.6 billion in SVB bridge bank loans to PNC

PNC Bank (PNC) accepted $16.6 billion in capital commitments from the Federal Deposit Insurance Corp. (FDIC) on Tuesday, the majority of which were loans held by Signature Bridge Bank.
CENTRAL, Hong Kong - Oct. 4, 2023 - PRLog -- Federal regulators established the bridge bank in March following the failure of its namesake bank.

More than half of the portfolio, or $9 billion, is made up of financed loans, largely in the form of credit lines to private equity (PE) companies. PNC might expand its range of solutions to private equity customers by taking on these credit lines, which are meant to assist PE companies manage liquidity and fund their investments.

The acquisition is projected to boost PNC's earnings by around 10 cents per share in the fourth quarter, with no impact on the bank's capital ratios and book value.

Signature Bank, a now-defunct regional bank situated in New York City, was one of two high-profile lenders to fail during this year's financial crisis in March. Federal authorities shut it down on March 12, two days after Silicon Valley Bank (SVB) did the same, raising concerns about contagion within the area banking sector. On the same day, in order to protect depositors, the FDIC moved the majority of Signature Bank's assets to a bridge bank.

"FDIC Establishes Signature Bridge Bank, N.A. as Successor to Signature Bank," says the Federal Deposit Insurance Corporation.

Signature Bank was the nation's 29th-largest bank with assets exceeding $110 billion shortly before its demise.

Cryptocurrency firms and startups were among its most important clientele.

The financial crisis wreaked havoc on regional lender stocks, and PNC was no exception. By May, shares of the Pittsburgh-based lender had fallen as much as 30%. While there was some rebound, PNC's shares have subsequently suffered and are now down nearly 25% year to date.

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