First Citizens Bank Acquire collapsed SVB
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News - March 27, 2023

First Citizens Bank Acquires Collapsed Silicon Valley Bank

First Citizens Bank has unveiled plans to purchase most of the assets of the failed United States tech lender, Silicon Valley Bank, SVB. The acquisition means that customers of SVB will automatically become customers of First Citizens, which is headquartered in Raleigh, North Carolina. 

The development comes as Federal Deposit Insurance Corp, FDIC, and other regulators had already taken extraordinary steps to head off a wider banking crisis by guaranteeing that depositors in SVB and failed Signature Bank would be able to access all of their money.

In a statement, FDIC hinted that the 17 former branches of SVB will open as First Citizens branches today. It added that the sale of Silicon Valley Bank involves the sale of all deposits and loans of SVB to First-Citizens Bank and Trust Co.

First Citizens Bank has more than $100 billion in total assets, with more than 500 branches in 21 states as well as a nationwide bank. It reported a net profit of $243 million in the last quarter and is the largest family-controlled bank in the country.

What does the acquisition mean?

The acquisition means that the FDIC possess shares in First Citizens worth $500 million. It also means that both the FDIC and First Citizens will share in losses and the potential recovery on loans included in a loss-share agreement.

Moreso, The FDIC will retain about $90 billion of Silicon Valley Bank’s $167 billion in total assets, while First Citizens will acquire $72 billion at a discount of $16.5 billion. The FDIC further hinted that Silicon Valley Bank’s failure will cost its industry-funded Deposit Insurance Fund about $20 billion, according to estimates.

How did Silicon Valley Bank Collapse

Silicon Valley Bank collapsed in a bank run on March 10 after customers rushed to withdraw money due to fears over the bank’s solvency. Its collapse made it the second-largest bank to crash in U.S. history after the 2008 failure of Washington Mutual. 

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