The deal includes the purchase of approximately $72 billion in loans at a discount of about $16.5 billion, along with the transfer of all of the bank’s deposits totaling about $56 billion, according to the FDIC.
First Citizens BancShares has agreed to acquire Silicon Valley Bank (SVB), the tech lender whose collapse this month sent shockwaves through the international financial system, according to an announcement made Sunday night by the Federal Deposit Insurance Corporation.
The FDIC seized SVB on March 10 after a run on deposits left the bank insolvent. The government has since sought a buyer for the lender eventually landing on First Citizens, a North Carolina-based bank with 574 branches in 19 states as of late 2019, with most of its locations in the Carolinas.
First Citizens was the 30th largest commercial bank in the country by assets at the end of 2022 and has experience buying FDIC-assisted banks.
SVB, known as Silicon Valley Bridge Bank after it was seized by the government, was the 16th-largest bank in the U.S. when it collapsed, marking the largest bank collapse since the 2008 financial crisis.
The deal includes the purchase of approximately $72 billion in loans at a discount of about $16.5 billion, along with the transfer of all of the bank’s deposits totaling about $56 billion, according to the FDIC. The 17 former branches of SVB will open as First–Citizens Bank & Trust Company branches this week, and depositors of Silicon Valley Bridge Bank will automatically become depositors of First–Citizens Bank.
SVB had about $175 billion in deposits prior to its collapse — illustrating the severity of the run on deposits that took place prior to its seizure.
“Admittedly, there has been a strong amount of runoff from the legacy Silicon Valley Bank this quarter,” Craig Nix, chief financial officer of First Citizens, said on a call with investors on Monday. “However, it is our intent to embrace the talents of our legacy SVB employees, embrace their business capabilities and then reiterate to their clients that First Citizens has an unwavering focus on holistic client relationships.”
At the time of its collapse, SVB had $10.9 billion of real estate loans on its books and was quickly followed by the collapse of New York City-based Signature Bank, which was known as a large lender to landlords and real estate developers. New York Community Bancorp subsidiary Flagstar Bank has since agreed to acquire Signature Bank.
Since the two failures, the FDIC and the banking industry have been working to shore up regional lenders in an attempt to prevent another collapse. The global banking community is on edge as well, with the Swiss government recently orchestrating the purchase of Credit Suisse by its rival bank UBS after Credit Suisse was hit with a masse of client outflows.