First Citizens Bank, based in North Carolina, is set to acquire the deposits and loans of Silicon Valley Bank, according to a statement released by the Federal Deposit and Insurance Corporation (FDIC) on March 26th. The agreement, known as a purchase and assumption agreement, involves 17 former branches of Silicon Valley Bank being rebranded as First Citizens Bank and Trust Company, while all depositors of SVB will become automatic depositors of First Citizens Bank.
The Federal Deposit Insurance Corporation (FDIC) is set to acquire about $72 billion worth of assets from Silicon Valley Bridge Bank, National Association at a reduced price of $16.5 billion. Meanwhile, securities and other assets totaling approximately $90 billion will be kept under the receivership of the FDIC for proper disposition. Additionally, the FDIC has gained equity appreciation rights in First Citizens BancShares, Inc. common stock with the potential of reaching $500 million in value.
The purchase will make First Citizens Bank the owner of Silicon Valley Bank’s deposits and loans. The North Carolina-based bank is currently the 30th largest commercial bank in the United States and had $167 billion in total assets and $119 billion in deposits as of March 10th.
The move comes after Silicon Valley Bank collapsed on March 10th amid rumors of a severe liquidity crisis, prompting a bank run. The FDIC was appointed as the receiver of the failed bank and attempted to auction off the fallen bank, with two separate auctions being held for SVB’s assets. One auction was for its traditional deposits unit, and the other was for its private bank, which serves high-net-worth individuals.
First Citizens was rumored to have been planning a bid for SVB as early as March 18th, according to Bloomberg. Three days later, it reportedly submitted a bid for all of SVB. Another regional bank, Valley National Bancorp, also submitted a bid for the collapsed bank.
Citizens Financial Group was also reportedly preparing to submit an offer for SVB’s private banking arm, according to a March 24th report from Reuters. The bank is yet to release a statement regarding the matter.
