First Citizens Bank strikes deal with FDIC to buy Silicon Valley Bank assets
First Citizens Bank has entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase substantially all loans and certain other assets of Silicon Valley Bridge Bank.
First Citizens Bank to acquire SVB assets
The deal includes the purchase of assets of $110 billion, deposits of $56 billion and $72 billion of SVB’s loans at a discount of $16.5 billion. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC.
As part of the acquisition, the two firms have entered into a loss-share transaction wherein both will share the losses and potential recoveries on the loans.
The FDIC estimates SVB’s collapse will cost its Deposit Insurance Fund (DIF) an estimated $20 billion in losses.
Additionally, the FDIC has also received equity appreciation rights in First Citizens BancShares common stock with a potential value of up to $500 million.
First Citizens Bank will also receive an available line of credit from the FDIC for “contingent liquidity purposes”. As of 27 March, all of the 17 former SVB branches have been reopened as First Citizens Bank branches.
“There will be no immediate change to customers’ current accounts, and they will be able to continue to access their accounts as they do today – through their current websites, mobile apps and branch locations,” First Citizens Bank says in a statement.
“They can continue to use their checks and cards and will still have ATM and online access to their accounts. Loan customers should continue making loan payments as usual. Customers will be notified of any future account changes in advance.”
Calling the acquisition a “natural fit”, Frank Holding, chairman and CEO of First Citizens, says: “This transaction also will accelerate our expansion in California and introduce wealth capabilities in the Northeast.”
The news comes weeks after Silicon Valley Bank dramatically collapsed, leading the FDIC to take charge and protect deposits by establishing a bridge bank.
On 13 March, HSBC UK stepped in to acquire SVB’s UK operations for a nominal sum of £1.
The SVB collapse also triggered the fall of New York’s Signature Bank, which is now being acquired in part by Flagstar Bank.
