BlackRock Inc. was hired as an adviser to help the US government arrange the sale of $114 billion in securities that were held by failed lenders Signature Bank and Silicon Valley Bank.
(Bloomberg) — BlackRock Inc. was hired as an adviser to help the US government arrange the sale of $114 billion in securities that were held by failed lenders Signature Bank and Silicon Valley Bank.
The asset-management giant will conduct the sales of $27 billion in securities from Signature and $87 billion from Silicon Valley Bank, the Federal Deposit Insurance Corp. said in a statement Wednesday. The holdings are mostly agency mortgage-backed securities, collateralized mortgage obligations and commercial MBS, the FDIC said.
The sales “will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions,” the FDIC said.
A BlackRock spokesperson declined to comment.
The Larry Fink-led firm has a history of managing distressed debt for US authorities. In the aftermath of the 2008 financial crisis, the Federal Reserve and the Treasury Department awarded contracts to BlackRock to manage $130 billion of bad debt formerly on the books of investment bank Bear Stearns Cos. and American International Group Inc.
Read more: BlackRock Is Go-To Firm to Divine Wall Street Assets
BlackRock was also one of four co-managers of a Fed program to buy more than a trillion dollars of residential mortgage-backed securities at the time.
Signature and SVB Financial Group’s Silicon Valley Bank were among three major US banks that collapsed in rapid succession last month under the weight of deposit withdrawals. That raised concern about contagion among US banks as they tried to adjust to the rapid rise in interest rates that devalued their holdings. First Citizens BancShares Inc. agreed to buy SVB, which unraveled in less than 48 hours in the biggest US bank failure in more than a decade.
The FDIC was appointed receiver for the banks last month. Signature’s deposits and some of its loans were taken over by New York Community Bancorp’s Flagstar Bank, while First Citizens acquired SVB’s from the FDIC.
–With assistance from Silla Brush, Sam Nagarajan and Shelley Robinson.
(Updates with BlackRock’s history with US authorities.)
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