FDIC seeks bids for Signature’s sub lines book

The FDIC has launched its sales process to offload Signature Bank’s portfolio of subscription lines.

The book has an unpaid principal balance of about $18.5 billion and is made up of 201 loans, states a July 25 announcement for prospective bidders.

The regulator has held the portfolio in a bridge bank since Signature’s failure in March. New York Community Bancorp acquired other portions of Signature from the bridge bank later that month.

The bidding notice says that the book will be offered in four pools, which are comprised of lead syndicated loans, non-lead syndicated loans and whole loans. The pools contain unpaid principal balances of $4.4 billion to $4.9 billion.

The notice adds that bidders will only being considered if they are “FDIC-insured depository institutions or commercial banks which certify, among other things, that they are not competitors of the borrowers.”

The FDIC has retained Newmark to handle the sale process. Bids are due by September 12 and the closing deadline is October 2.

Bloomberg reported that Signature’s sub lines book includes five prominent managers as borrowers: Blackstone, Brookfield, Carlyle, Thoma Bravo and Starwood Capital.

An FDIC representative declined to confirm that the reported firms are borrowers, while Newmark representatives did not return a request for comment.

Representatives for Blackstone and Starwood Capital declined to comment. Brookfield, Thoma Bravo and Carlyle did not return comment requests.

A person familiar with Signature told Private Funds CFO that its sub lines business was started about five years by a group that joined from Silicon Valley Bank, another important lender in the space that also failed in March.

“It was a great growth story,” the person said, lamenting Signature’s collapse.

The failures of Signature and SVB hit the sub lines market – but they were not the only shocks to it.

Lender First Republic met its demise in May when it was acquired in an emergency deal by JPMorgan Chase. And banks have pulled back due to constraints on their capital and their internal concentration limits, Private Funds CFO previously reported.

Since Signature’s collapse, alumni have joined fund finance businesses at The Huntington National Bank and Axos Bank.