(Bloomberg) -- Chinese regulators held a meeting with banks to gauge interest in taking over failed Silicon Valley Bank’s stake in a local joint venture in a bid to safeguard the banking system from the US lender’s collapse.

The China Banking and Insurance Regulatory Commission convened a meeting this week to discuss the disposal of SVB’s 50% holding in SPD Silicon Valley Bank, people familiar with the matter said, asking not to be named as the information is private. Some Chinese banks have already indicated interest, one of the people said, adding that discussions are at very early stage. It was unclear if the regulator prefers a foreign buyer, another person said.

Shanghai Pudong Development Bank Co. is the Chinese partner in the joint venture. The banking regulator and SPDB didn’t immediately respond to requests for a comment.

While Chinese authorities have made few public comments on the turmoil, the latest development suggests Beijing is wary of the potential impact on the nation’s $54 trillion banking system. Chinese lenders are already struggling with ballooning loan losses after a deep real estate slump and as the protracted pandemic has stunted economic growth.

First Citizens BancShares Inc. earlier this week agreed to buy SVB’s US operations, acquiring about $72 billion of assets at a discount of $16.5 billion. UK authorities earlier this month also pushed through a deal to have HSBC Holdings Plc snap up SVB’s UK business for £1.

Santa Clara, California-based SVB became the biggest US lender to fail in more than a decade after an unsuccessful attempt to raise capital amid an exodus of cash from the tech startups that formed the backbone of its operations. US officials have rushed to contain any broader impact with measures to make depositors whole. The turmoil has also put pressure on other lenders and brought down Signature Bank.  

SPD Silicon Valley Bank, based in Shanghai, was set up in 2012 with a similar focus as the US lender to provide banking services to technology companies and entrepreneurs in China. It has offices in Beijing, Shanghai and Shenzhen, but provides no retail banking services. 

After SVB’s collapse, the JV said its operations were independent and stable as it tried to reassure local clients. SPD Silicon Valley Bank is operated in accordance with Chinese laws and regulations, with a standard governance framework and independent balance sheet, it said. 

The 50-50 joint venture had a registered capital of 2 billion yuan ($289 million) as of the end of June, according to Shanghai Pudong’s public filings. It had total assets of 21.3 billion yuan and recorded a net loss of 5.5 million yuan in the first half of 2022.

--With assistance from Lisa Du and Zhang Dingmin.

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