First-Citizens Bank To Acquire SVB's Deposits, Loans

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First-Citizens Bank To Acquire SVB’s Deposits, Loans

| Updated: March 27, 2023 12:29

The Federal Deposit Insurance Corporation (FDIC) sold all deposits and loans of Silicon Valley Bridge Bank deposits and loans by First–Citizens Bank & Trust Company on Monday. 

First-Citizens Bank & Trust Company will immediately accept Silicon Valley Bridge Bank, National Association’s depositors as depositors. “All deposits assumed by First–Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit,” the government corporation said in a press release.

First Citizens BancShares, Inc., which has its corporate headquarters in Raleigh, owns First Citizens Bank. The deal has been set up as a loss share covered full bank buy.

The lender, which has its headquarters in Raleigh, North Carolina, has about $109 billion in assets and $89.4 billion in total deposits. The FDIC will also grant it access to a line of credit that is currently open for contingent liquidity needs.

As of March 10, 2023, SVB had roughly $119 billion in total deposits and nearly $167 billion in total assets. In the transaction with First Citizens, assets worth around $72 billion from SVB NA were purchased at a $16.5 billion discount.

The First Citizens BancShares, Inc., Raleigh, North Carolina, the common stock also came with equity appreciation rights that may be worth up to $500 million, which were given to the FDIC.

The FDIC calculates that SVB’s failure will cost its Deposit Insurance Fund (DIF) about $20 billion.

For the past two weekends, the FDIC attempted to sell Silicon Valley Bank and SVB Private together, but it was unable to come to an agreement. Since then, it has requested distinct proposals for Silicon Valley Bank and SVB Private by March 24.

After abandoning a plan to raise money, Silicon Valley Bank fell apart in less than 48 hours, making it the largest US lender to fail in more than a decade. As interest rates rose, the bank suffered a significant loss in the sales of its securities, which alarmed investors and depositors who immediately started withdrawing their funds.

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