US Firm First–Citizens Bank Acquires Silicon Valley Bank
Despite multiple efforts by the regulators to lock a deal for all or parts of the bank in a bid to cover the uninsured deposits of its startup customers, an auction attempt passed without a buyer previously
Photo Credit : Twitter, svb.com,
First Citizens Bank & Trust Company has agreed to buy Silicon Valley Bank (SVB) which was seized by US regulators following a run on the lender. According to a statement from the Federal Deposit Insurance Corp (FDIC), the North Carolina-based bank entered into a purchase and assumption agreement for all deposits and loans of SVB.
The deal includes the purchase of about USD 72 billion SVB assets at a discount of USD 16.5 billion. About USD 90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. The Federal institution also got equity appreciation rights in First-Citizens worth USD 500 million.
The estimated cost of the failure to the Deposit Insurance Fund is about USD 20 billion, though the exact extent will be determined when receivership is terminated, according to the statement.
"This has been a remarkable transaction in partnership with the FDIC that should instil confidence in the banking system," Frank Holding Jr., CEO of First Citizens, said in a statement.
Silicon Valley Bank became the biggest US lender to fail in more than a decade, unravelling in less than 48 hours after outlining a plan to shore up capital. Despite multiple efforts by the regulators to lock a deal for all or parts of the bank in a bid to cover the uninsured deposits of its startup customers, an auction attempt passed without a buyer previously.
First-Citizens previously submitted a bid for SVB immediately after it collapsed, according to media reports. The bank was the 30th largest commercial bank in the US by assets at the end of 2022, according to Federal Reserve data.
It has acquired more than 20 FDIC-assisted banks since 2009, striking a series of deals after the financial crisis from Washington to Wisconsin to Pennsylvania. First-Citizens also completed the acquisition of CIT Group Inc. last year in a deal valued at more than USD 2 billion.
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