First Citizens BankShares has agreed to acquire Silicon Valley Bank. Silicon Valley Bank is a California bank that has served as the lifeblood of thousands of start-ups and whose failure sent shockwaves through the financial sector.
The deal includes the purchase of approximately $72 billion of Silicon Valley Bank assets at a $16.5 billion discount. About $90 billion of securities and other assets of the California-based lender will remain “under disposal control” by the FDIC.
The announcement comes a few weeks after the FDIC took control of Silicon Valley Bank. The 17 former branches of Silicon Valley Bank will open as First Citizens Bank on Monday, according to the FDIC.
Regulators previously moved all SVB deposits to a new “bridge bank” to protect depositors. The Federal Reserve provided relief to depositors earlier this month by ensuring that lenders’ depositors are fully insured. Depositors will be able to access all funds starting March 13th.
“In addition, the FDIC has acquired the right to increase the value of the common stock of First Citizens BankShares, Inc. of Raleigh, North Carolina, by up to $500 million,” the FDIC said in a statement.
Before the collapse, Silicon Valley Bank was the 16th largest bank in the United States. That sudden meltdown was the largest US bank failure since the 2008 financial crisis.
First Citizens Chairman and CEO Frank B. Holding, Jr. said in a statement:
“This transaction leverages our strong foundation to add significant scale, geographic diversity, compelling digital capabilities and, most importantly, meaningful solutions across the customer lifecycle. Specifically, it is committed to building and maintaining the strong relationships that SVB’s traditional global fund banking business has developed with private equity and venture capital firms. Accelerating our expansion in California and introducing property capabilities in the Northeast, SVB’s Private Wealth business is a natural fit with our high-touch, sophisticated level of wealth services and approach.”
