United Food and Commercial Workers International Union is calling on the Federal Deposit Insurance Corporation not to sell Silicon Valley Bank assets to Apollo Global Management [NYSE: APO], as long as Apollo’s insurance subsidiary Athene remains a creditor to SVB Financial Group, the bank holding company.

“We think it’s bad policy for FDIC to sell Silicon Valley Bank assets at a potential discount to Apollo entities now, when it may have to recover funds later from the parent company in competition with Apollo entities in its Chapter 11 case,” says Courtney Alexander, the union’s researcher.

Research shows that as of December 31, 2022, Athene’s insurance companies, which are wholly-owned by Apollo, owned $145 million of debt obligations of SVB Financial Group.

The FDIC will likely need to seek assets of SVB Financial Group to mitigate its losses, given that the FDIC has guaranteed full value of Silicon Valley Bank’s deposits¹ and that bank holding companies may be liable for losses borne by regulators in a bank wind-up². In that event, FDIC could also be a creditor of SVB Financial, pitting FDIC and Apollo’s interests against each other by competing to recover the most from the holding company in the developing Chapter 11 case. Ahead of that possibility, UFCW does not believe the FDIC should consider selling some portion of the bank’s portfolio to Apollo at a potential discount.

“If FDIC does sell bank assets to Apollo now, it should demand concessions from Apollo’s Athene to preserve FDIC’s fullest recovery in the bankruptcy case of SVB Financial,” Ms. Alexander argued.

A March 14, 2023 Financial Times article entitled “Buyout titans weigh purchases from Silicon Valley Bank loan book” quoted Apollo’s CEO about its interest in these FDIC assets:

“’The opportunity for us is to continue to be a conduit for investors to take investment-grade type, safe yield opportunities from the banking system to the investment marketplace to maintain diversification of our financial system,’ Marc Rowan, Apollo’s chief executive and co-founder, told the Financial Times.”³

According to Athene’s Annual Statements filed with insurance regulators for the period ending December 31, 2022:

• Athene Annuity and Life Company owned $62,642,480 face value of SVB Financial GR Senior Unsecured Notes and $15,167,000 face value of SVB Financial GR Junior Subordinated Notes as of December 31, 2022.⁴
• Athene Annuity and Life Company also owned a limited partner interest in SVB Innovation Credit Growth Fund IX, LP, valued at $14,758,423 as of December 31, 2022.⁵
• Athene Annuity and Life Assurance Company owned $49,763,660 SVB Financial GR Senior Unsecured Notes and $17,958,000 SVB Financial GR Junior Subordinated as of December 31, 2022.⁶

For more information, contact Courtney Alexander, researcher at UFCW International Union, calexander@ufcw.org.

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1</sup> Wall Street Journal, SVB, Signature Bank Depositors to Get All Their Money as Fed Moves to Stem Crisis, 3/13/2023 https://www.wsj.com/articles/federal-reserve-rolls-out-emergency-measures-to-prevent-banking-crisis-ba4d7f98?mod=hp_theme_svb-ribbon

² Wall Street Journal, Silicon Valley Bank Creditors Form Group in Advance of Possible Bankruptcy, 3/14/2023 https://www.wsj.com/articles/silicon-valley-bank-creditors-form-group-in-advance-of-possible-bankruptcy-62e631aa?mod=Searchresults_pos2&page=1 “Bankruptcy laws state that companies under court protection are required to honor commitments to banking regulators ‘to maintain the capital of an insured depository institution.’ That means the Federal Deposit Insurance Corp., as the receiver for Silicon Valley Bank, could argue that funds or assets at the parent level should be used to fill any hole in the bank’s balance sheet before bondholders can be paid a penny.”

³ Financial Times, Buyout titans weigh purchases from Silicon Valley Bank loan book, 3/14/2023 https://www.ft.com/content/43f8e0ca-f0fb-4ecb-b568-a242398643bc

⁴ https://content.naic.org/industry/insdata, Annual Statement for the year 2022 of The Athene Annuity and Life Company, Schedule D – Part 1, NAIC Document number 61689.2022.L.AN.PI.O.M.4477289; E10.42 PDF p 1146 and E11 PDF p 1236.

⁵ https://content.naic.org/industry/insdata, Annual Statement for the year 2022 of The Athene Annuity and Life Company, Schedule D – Part 1, NAIC Document number 61689.2022.L.AN.PI.O.M.4477289, E07.3 PDF p. 1094.

⁶ https://content.naic.org/industry/insdata, Annual Statement for the year 2022 of The Athene Annuity and Life Assurance Company, Schedule D – Part 1, NAIC Document number 61492.2022.L.AN.PI.O.M.4477613; E10.26 PDF p 414 and E07.3 PDF p 472.

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