North Carolina-based First Citizens Bank will buy the loans and deposits of beleaguered American lender Silicon Valley Bank, which was placed into receivership by the Federal Deposit Insurance Corporation.
The FDIC has entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association, by First–Citizens Bank & Trust Company—the parent company for First Citizens Bank.
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The transaction included the purchase of about $72 billion of SVB National Association's assets at a discount of $16.5 billion, the FDIC noted in statement released on Monday morning India Standard Time. The 17 former branches of Silicon Valley Bank will open as First–Citizens Bank & Trust Company on Monday, the statement added.
Silicon Valley Bank had been placed into receivership by the FDIC on March 10. In order to protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Silicon Valley Bank to Silicon Valley Bridge Bank, National Association, a full-service bank that was operated by the FDIC.
"All deposits assumed by First–Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit," the statement noted, referring to the FDIC's $250,000 limit on insured deposits.
FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund to be approximately $20 billion. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC, according to the statement.
The FDIC and First–Citizens Bank & Trust Company have also entered into a loss-share transaction on the commercial loans it purchased of the former Silicon Valley Bridge Bank. "The FDIC as receiver and First–Citizens Bank & Trust Company will share in the losses and potential recoveries on the loans covered by the loss–share agreement," the FDIC statement said.
The FDIC has also received equity appreciation rights in First Citizens' common stock with a potential value of up to $500 million. First Citizens Bank had an asset size of $109 billion as of December 2022.
The North Carolina-based lender's stock closed at $55 a share, up 22.22%, as of market close in New York on Friday.
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