A buyer is scooping up parts of Silicon Valley Bank, whose collapse earlier this month marked the second-largest bank failure in US history.
First Citizens Bank has entered into an agreement to buy all of Silicon Valley Bank’s loans and deposits, according to a Federal Deposit Insurance Corporation (FDIC) announcement. The 17 branches once belonging to Silicon Valley Bank will now open as First Citizen Bank branches beginning today (March 27).
“Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations,” the FDIC said in a press release.
According to the FDIC, the purchase includes $72 billion of Silicon Valley Bank assets at a $16.5 billion discount. About $90 billion in stressed securities and other assets will remain in FDIC receivership. The FDIC has obtained equity appreciation rights of up to $500 million in First Citizens Bank common stock.
The FDIC took control of Silicon Valley Bank on March 10, following a bond fire sale and run on deposits, and moved them into a “bridge bank” to protect depositors. At the time, the lender had an estimated $167 billion in assets and $119 billion in deposits. The regulators have since been seeking to auction off Silicon Valley Bank. The bank’s failure will cost the FDIC an estimated $20 billion.
North Carolina-based First Citizens Bank has bought more than 20 collapsed banks since 2009, according to Bloomberg.
Quotable
“We are committed to building on and preserving the strong relationships that legacy SVB’s Global Fund Banking business has with private equity and venture capital firms. This transaction also will accelerate our expansion in California and introduce wealth capabilities in the Northeast.” —A statement from Frank B. Holding, Jr., the chairman and CEO of First Citizens Bank
How big will First Citizens get after buying SVB?
The North Carolina-based First Citizens Bank has an estimated $109 billion in assets, and $89.4 billion in deposits, and was the 30th largest bank in the US as of December 2022.
The SVB purchase deal nearly doubles the size of First Citizens’ current assets, totalling $181 billion and making it one of the top 25 banks in the US, while its deposits will total an estimated $145 billion.
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