: First Citizens enters agreement to buy Silicon Valley Bridge Bank, says FDIC

by | Mar 27, 2023 | Stock Market

First Citizens BancShares Inc. has entered a deal to assume all the deposits and loans of the failed Silicon Valley Bridge Bank from the Federal Deposit Insurance Corp. (FDIC), the regulator announced on Monday. As of Monday, the 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First Citizens
FDIC said. The FDIC has been trying to auction off Silicon Valley Bank for about two weeks, since it became the largest U.S. bank to go bust since Washington Mutual in 2008.

Customers of Silicon Valley Bridge Bank have been instructed to use their current branch until they are notifed that the systems conversion has been completed, and depositors will be automatically switched to First Citizens. “All deposits assumed by First Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit,” said the regulator. As of March 10, Silicon Valley Bridge Bank had approximately $167 billion in total assets and about $119 billion in total deposits, the FDIC said. The deal included the purchase of about $72 billion of Silicon Valley Bridge Bank’s assets at a discount of $16.5 billion. Roughly $90 billion in securities and other assets will remain in FDIC receivership for disposition, and the regulator has received equity appreciation rights in First Citizens common stock worth up to $500 million. The FDIC and the Raleigh, North Carolina-based bank entered into a loss–share transaction on the commercial loans it purchased of former Silicon Valley Bridge Bank.  The FDIC said it will share in the losses and potential recoveries on the loans covered by that agreement, which is “projected to maximize recoveries on the assets by keeping them in the private sector,” and minimize disruptions for loan customers.  First Citizens will also assume all loan–related qualified financial contracts. The FDIC estimates the cost of the failure of Silicon Valley Bank to its Depos …

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