In March 2023, the Federal Deposit Insurance Corporation (FDIC), the United States deposit insurance authority, first transferred parts of the business of the US-based bank to a bridge institution. Also in March, the FDIC then sold parts of the bank’s business activities to First-Citizens Bank & Trust Company in the US. This sale did not include the business activities of the bank’s German branch, which was its sole branch in the European Union. The FDIC has now sold parts of these business activities to Bootstrap Europe III S.C.Sp., Luxembourg. The authority will either likewise sell the remaining parts or wind them up itself.

The FDIC had asked BaFin to recognise the measures taken due to the failure of Silicon Valley Bank, to ensure that these measures are also fully effective in Germany. As a foreign authority, the FDIC does not have the power of a public authority to issue orders in Germany. BaFin has now fulfilled this request by way of administrative assistance. In this way, BaFin is ensuring legal certainty in its capacity as the national resolution authority.

Background

If, in a country outside the European Union, a bank with a branch in Germany fails and is resolved by a third-country authority, BaFin recognises this resolution if certain conditions are met. Resolution may be carried out, for example, in the form of a transfer to a bridge institution or sale of business. The conditions for recognition are set out in section 169 et seq. of the German Recovery and Resolution Act (Sanierungs- und Abwicklungsgesetz – SAG).