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Blackstone (BX) Leads in Property Loan Sale of Signature Bank
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Blackstone Inc. (BX - Free Report) is leading to win the $17-billion portfolio of commercial property loans from the U.S. Federal Deposit Insurance Corp’s (“FDIC”) sale of Signature Bank debt. The news was first reported by Bloomberg, citing people familiar with the matter.
Following the failure of Signature Bank this March, the FDIC has been seeking to offload $33 billion of the New York lender’s real estate loans.
Notably, Signature Bank had been a big lender to apartment landlords in New York City, with a portion of loans backing buildings that have rent-stabilized or rent-controlled units. However, the rent-stabilized apartments are not part of the Blackstone deal.
The bidding process had tempted companies like Starwood Capital Group and Brookfield Asset Management Ltd as well. While it has not been made clear how many bidders sought out each portfolio, many companies had planned to team up with other firms for offers.
While the regulators have not yet arrived at the final agreement, FDIC officials are in discussions to declare Blackstone’s bid as bringing the lowest costs to the agency, per people familiar with the matter.
Moreover, according to the people, BX is in talks to partner with Rialto Capital to help in servicing the loans.
Neither did BX nor Rialto comment on the matter. Also, an FDIC representative declined to comment.
Over the past six months, shares of BX have gained 23.5% compared with the industry’s 3.2% rally.
Toward the end of the first quarter of this year, the fastest rate hikes since the 1980s led to a crisis in the banking industry and resulted in the collapse of four banks — Silvergate Capital, Signature Bank, Silicon Valley Bank and First Republic Bank.
Following its failure, Signature Bank was closed by regulators. The FDIC took over the fallen bank and transferred all the deposits and substantially all the assets to Signature Bridge Bank, N.A.
Thereafter, $38 billion in assets and $36 billion of liabilities of Signature Bridge Bank was acquired by New York Community Bancorp, Inc.’s (NYCB - Free Report) subsidiary, Flagstar Bank.
Specifically, $38 billion in assets consisted of several loan portfolios aggregating $13 billion and cash totaling $25 billion (including $2.7 billion arising from a discounted bid to net asset value). The acquired loans exclusively consisted of commercial and industrial loans.
The liabilities of $36 billion consisted of deposits of $34 billion and other liabilities of $2 billion. It also includes its core bank deposit relationships, including the New York and the West Coast private client teams.
The deal also included Signature Bank’s wealth management and broker-dealer business.
However, because of the uncertainty in the digital asset space at that time, NYCB did not acquire any digital asset banking, crypto-related assets or the fund banking business of Signature Bank. Also, NYCB did not acquire Signature Bank’s multi-family, commercial real estate and some other loans.
Likewise, Silicon Valley Bank was seized by the FDIC and then sold to First Citizens BancShares, Inc. (FCNCA - Free Report) .
FCNCA assumed Silicon Valley Bank’s assets worth $110 billion, deposits worth $56 billion and loans worth $72 billion.
First Citizens was also selected for the transaction through a competitive bidding process. It won an auction coordinated by the FDIC among 18 bidders who had put in 27 bids for Silicon Valley Bank.
The purchase of Silicon Valley Bank has been by far the biggest challenge for FCNCA, which has a history of buying failed banks.
Then, First Republic Bank, the second-biggest bank failure in history, was acquired by JPMorgan (JPM - Free Report) . The deal made the largest U.S. bank an even bigger financial behemoth.
JPM bought the bulk of First Republic’s $228 billion of assets (adding to its huge $3.7-trillion assets balance) and assumed deposits worth $92 billion by paying $10.6 billion. The deal complements JPM’s wealth business and is expected to result in increased penetration within the high-net-worth clients. Also, JPM expected the transaction to generate more than $500 million of “incremental net income” annually.
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Blackstone (BX) Leads in Property Loan Sale of Signature Bank
Blackstone Inc. (BX - Free Report) is leading to win the $17-billion portfolio of commercial property loans from the U.S. Federal Deposit Insurance Corp’s (“FDIC”) sale of Signature Bank debt. The news was first reported by Bloomberg, citing people familiar with the matter.
Following the failure of Signature Bank this March, the FDIC has been seeking to offload $33 billion of the New York lender’s real estate loans.
Notably, Signature Bank had been a big lender to apartment landlords in New York City, with a portion of loans backing buildings that have rent-stabilized or rent-controlled units. However, the rent-stabilized apartments are not part of the Blackstone deal.
The bidding process had tempted companies like Starwood Capital Group and Brookfield Asset Management Ltd as well. While it has not been made clear how many bidders sought out each portfolio, many companies had planned to team up with other firms for offers.
While the regulators have not yet arrived at the final agreement, FDIC officials are in discussions to declare Blackstone’s bid as bringing the lowest costs to the agency, per people familiar with the matter.
Moreover, according to the people, BX is in talks to partner with Rialto Capital to help in servicing the loans.
Neither did BX nor Rialto comment on the matter. Also, an FDIC representative declined to comment.
Over the past six months, shares of BX have gained 23.5% compared with the industry’s 3.2% rally.
Image Source: Zacks Investment Research
Currently, BX carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Little Detail on the U.S. Regional Banking Crisis
Toward the end of the first quarter of this year, the fastest rate hikes since the 1980s led to a crisis in the banking industry and resulted in the collapse of four banks — Silvergate Capital, Signature Bank, Silicon Valley Bank and First Republic Bank.
Following its failure, Signature Bank was closed by regulators. The FDIC took over the fallen bank and transferred all the deposits and substantially all the assets to Signature Bridge Bank, N.A.
Thereafter, $38 billion in assets and $36 billion of liabilities of Signature Bridge Bank was acquired by New York Community Bancorp, Inc.’s (NYCB - Free Report) subsidiary, Flagstar Bank.
Specifically, $38 billion in assets consisted of several loan portfolios aggregating $13 billion and cash totaling $25 billion (including $2.7 billion arising from a discounted bid to net asset value). The acquired loans exclusively consisted of commercial and industrial loans.
The liabilities of $36 billion consisted of deposits of $34 billion and other liabilities of $2 billion. It also includes its core bank deposit relationships, including the New York and the West Coast private client teams.
The deal also included Signature Bank’s wealth management and broker-dealer business.
However, because of the uncertainty in the digital asset space at that time, NYCB did not acquire any digital asset banking, crypto-related assets or the fund banking business of Signature Bank. Also, NYCB did not acquire Signature Bank’s multi-family, commercial real estate and some other loans.
Likewise, Silicon Valley Bank was seized by the FDIC and then sold to First Citizens BancShares, Inc. (FCNCA - Free Report) .
FCNCA assumed Silicon Valley Bank’s assets worth $110 billion, deposits worth $56 billion and loans worth $72 billion.
First Citizens was also selected for the transaction through a competitive bidding process. It won an auction coordinated by the FDIC among 18 bidders who had put in 27 bids for Silicon Valley Bank.
The purchase of Silicon Valley Bank has been by far the biggest challenge for FCNCA, which has a history of buying failed banks.
Then, First Republic Bank, the second-biggest bank failure in history, was acquired by JPMorgan (JPM - Free Report) . The deal made the largest U.S. bank an even bigger financial behemoth.
JPM bought the bulk of First Republic’s $228 billion of assets (adding to its huge $3.7-trillion assets balance) and assumed deposits worth $92 billion by paying $10.6 billion. The deal complements JPM’s wealth business and is expected to result in increased penetration within the high-net-worth clients. Also, JPM expected the transaction to generate more than $500 million of “incremental net income” annually.