North Carolina-based First Citizens BancShares Inc has announced its agreement to acquire the deposits and loans of the failed Silicon Valley Bank (SVB). The acquisition was confirmed on March 26 by the Federal Deposit Insurance Corporation (FDIC).
As part of the deal, First Citizens Bank & Trust Company will assume SVB assets of $110 billion, deposits of $56 billion, and loans of $72 billion. The FDIC has also received equity appreciation rights in First Citizens BancShares stock, with a potential value of up to $500 million.
To ensure financial stability, First Citizens will receive a line of credit from the FDIC for contingent liquidity purposes, as well as an agreement for loss sharing on commercial loans. Starting Monday, March 27, SVB's 17 former branches will operate as a division of First Citizens Bank. The acquisition is expected to accelerate First Citizens' expansion in California and add wealth management capabilities in the northeast United States.
First Citizens purchased approximately $72 billion of SVB's assets at a discount of $16.5 billion. The FDIC estimates the cost of SVB's failure to its Deposit Insurance Fund to be approximately $20 billion. About $90 billion in securities and other assets from SVB will remain in receivership for disposal.
Silicon Valley Bank collapsed on March 10 due to a severe liquidity crisis, which prompted a bank run and led to the FDIC taking over as receiver. Two separate auctions were held for SVB's assets, with First Citizens submitting a successful bid for all of SVB.
Other regional banks, such as Valley National Bancorp and Citizens Financial Group, were also reported to have submitted bids or prepared offers for SVB's assets. With the acquisition of SVB, First Citizens aims to strengthen its presence in the banking sector while ensuring the financial stability of the combined company.
Juliette Twain: May 31, 2023 10:03:19 AM
