Blank Check Firm Porticoes Plans to Snap Up Fallen Banks

Blank check firm Porticoes Capital is reportedly planning to buy up failed U.S. banks.

The group aims to take over banks that have been closed by the Federal Deposit Insurance Corporation (FDIC), the Financial Times reported Wednesday (March 13), citing a regulatory filing.

According to the FT report, Porticoes is like a special purpose acquisition company (SPAC) in that it would need to acquire another company before going into business. But it differs from a SPAC in that the amount it raises from investors will depend on the size of the bank it acquires.

The report also postulates that Porticoes’ plan to target failed banks suggests it anticipates more trouble for the industry after last year’s regional banking crisis, kicked off by the collapse of Silicon Valley Bank (SVB).

The FT also notes that the FDIC normally likes to sell failed banks to other banks, so that everything remains under the watch of regulators. It’s a system that has kept out private investors. Porticoes was able to gain access via a “shelf charter” from the Office of the Comptroller of the Currency.

“I’m an advocate for the shelf charter,” Brian Brooks, partner at law firm O’Melveny & Myers and a former acting comptroller of the currency, told the FT. “In the failure of SVB, numerous potential bidders were excluded from the process, and as a result the cost to the FDIC deposit insurance fund might not have been minimized.”

As PYMNTS wrote earlier this week upon the anniversary of the SVB collapse, the crisis raised the FDIC’s public profile for the first time in years.

“In the aftermath of SVB, the question of deposit insurance — how much and who should get it — has been hotly debated in finance,” that report said.

The regulator said last year that it was in favor of “targeted coverage” as one of the options for deposit insurance reform. Through that path, different deposit insurance limits would be offered different types of accounts, with business payment accounts receiving “significantly higher” coverage than others.

“The FDIC believes targeted coverage best meets the objectives of deposit insurance of financial stability and depositor protection relative to its costs,” the FDIC said in May.

As PYMNTS wrote, the topic could get some renewed interest, as New York Community Bank, which last year acquired another failed lender, Signature Bank, lost roughly 7% of deposits and warned of “material weaknesses.”