(Bloomberg) -- The Federal Deposit Insurance Corp. is on its way to profiting off the deal it helped broker for First Citizens BancShares Inc.'s takeover of SVB Financial Group.
Equity-appreciation rights awarded to the regulator went into the money Monday, as shares began trading with a surge of as much as 49%, to $870.15. The rights, which have a potential value of $500 million, mean the FDIC stands to gain if the stock rises above $582.55, according to a regulatory filing.
Authorities have sought to keep federal involvement in bank rescues to a minimum to avoid accusations of a bailout, but dealing with the collapse of SVB and Signature Bank earlier this month hasn't been entirely without a cost. The FDIC's Deposit Insurance Fund will suffer an estimated $20 billion hit linked to SVB and a $2.5 billion blow from Signature, according to the agency.
About $90 billion of securities and other assets tied to SVB will remain in receivership with the agency, as will $60 billion in loans from Signature.
The FDIC has until April 14 to exercise its stock rights, with the ultimate payout linked to the average trading price over the two prior days. The swift benefit from the transaction echoes an arrangement the agency struck with New York Community Bancorp Inc. as part of its agreement to take over Signature Bank's deposits and some of its loans.
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