Overview
Qualified banks may be offered the opportunity to acquire assets and assume liabilities of potentially failing banks. Qualified asset buyers may be offered the opportunity to acquire loans of larger potentially failing banks marketed by the FDIC. After executing a confidentiality agreement, interested bidders are granted access to failing bank information to conduct due diligence and review the FDIC transaction terms. The FDIC conducts a sealed, competitive bid process and evaluates bids against the FDIC’s cost of liquidation and the cost of other bids.
The FDIC does not publish lists of potentially failing banks, as this information is a confidential regulatory matter. Invitations to access information about a specific acquisition opportunity are extended only to qualified banks that meet regulatory, total asset, and geographic criteria. Invitations to access information about a specific acquisition opportunity may be extended to asset buyers after completing an application process and receiving approval from the FDIC.
Resolution Process
The FDIC resolves failing banks in the least costly manner to the Deposit Insurance Fund (DIF) while minimizing disruption to depositors and customers of failed banks.
Chartering Authority Role
The decision to close a bank is generally determined by its chartering authority, not the FDIC. A bank offered as an acquisition opportunity may improve its condition and avoid failure during the marketing process.
Acquisition Opportunities
The FDIC does not publish lists of potentially failing banks, as this information is a confidential regulatory matter. Invitations to access information about a specific acquisition opportunity are extended only to qualified banks that meet certain criteria, such as geographic, size, and regulatory criteria.
Marketing Process Duration
The marketing process begins when qualified banks are notified of an acquisition opportunity. It generally lasts a few days to several weeks depending on the nature of the failure, but may conclude more rapidly if the chartering authority determines the bank must be closed sooner.
Liquidity issues, or other situations affecting a bank’s viability, may result in an accelerated failure that occurs in a matter of days.
Due Diligence
Provided sufficient marketing time, interested bidders may conduct due diligence to value assets and formulate bids.
Regulatory Approvals
Qualified banks must also obtain regulatory approval to bid on a failing bank and are encouraged to seek regulatory approval early in the marketing process. The FDIC notifies regulators of banks interested in bidding, and verifies regulatory approval.