FDIC mulls loss-sharing with nonbanks to boost bids on failed lenders, Bloomberg reports

Could 5 (Reuters) – The U.S. Federal Deposit Insurance coverage Corp (FDIC) is mulling whether or not to supply loss-sharing agreements to personal fairness corporations and different nonbanks that purchase components of failed lenders, after it was left holding a big portfolio of Signature Financial institution loans following its collapse, Bloomberg Information reported on Friday.

For the reason that FDIC doesn’t regulate nonbanks, the corporations can not bid for a whole lender however such a transfer may entice them to purchase loans and belongings at a reduction from collapsed establishments and assist the FDIC get greater bids, the report stated.

The FDIC didn’t instantly reply to a Reuters request for remark.

Earlier this week, JPMorgan (JPM.N) entered right into a loss-sharing settlement with the FDIC when it agreed to imagine all of First Republic’s deposits however share losses on sure portfolios together with residential and business loans.

Final month, the FDIC retained asset supervisor BlackRock’s (BLK.N) monetary markets advisory unit to promote two portfolios with face values of almost $27 billion and $8 billion, in line with itswebsite, after the collapse of Signature Financial institution and Silicon Valley Financial institution.

Reporting by Juby Babu in Bengaluru

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