Once again, Silicon Valley Bank grabbed news, but this time it was because First Citizens Bank is now purchasing the majority of the latter’s operations following its recent collapse. After Silicon Valley Bank collapsed, regulators moved all of its deposits and loans to a bridge bank. Late Sunday, the Federal Deposit Insurance Corporation announced that it had previously agreed that First Citizens Bank & Trust Company would purchase all of those deposits and liabilities.
The First Citizens Bank announced earlier today that seventeen former Silicon Valley Bank branches will begin operating as “Silicon Valley Bank, a division of First Citizens Bank.” The Federal Deposit Insurance Corporation then added that Silicon Valley Bank customers will continue to use their current branch until First Citizens notifies them that systems have been converted to allow full service at its larger branch network.
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The First Citizens Bank Purchases Silicon Valley Bank
It can be mentioned that the Silicon Valley Bank has been shuttered by the regulators last week after clients withdrew $42 billion in a single day. It is the second-largest bank failure in US history, following the 2008 failure of Washington Mutual.
According to reports, the Federal Deposit Insurance Corporation has agreed to guarantee all deposits, including those above the $250,000 per account that is normally guaranteed. First Citizens, on the other hand, was founded in Raleigh, North Carolina, and provides general banking services through more than 550 branches and offices in 23 states.
The FDIC also disclosed that First Citizens would acquire the $72 billion in loans from Silicon Valley Bank at a discount of $16.5 billion. While the FDIC will continue to be the receiver for the approximately $90 billion in securities and other assets that Silicon Valley Bank possessed.
The regulator continued by stating that the FDIC had calculated that the failure of Silicon Valley Bank would cost its Deposit Insurance Fund roughly $20 billion. On the other hand, when the FDIC ends the receivership, the precise cost will be known.
The Reason Behind the Acquisition
According to Frank B. Holding, chairman and CEO of First Citizens, this acquisition has the opportunity to leverage its foundation while also bringing significant scale, regional diversity, appealing digital capabilities, and relevant solutions for consumers throughout their lifespan.
He went on to say that they are extremely committed to building and protecting Silicon Valley Bank’s Global Fund Banking business’s ties and legacy with private equity and venture capital organizations.