• Tuesday, July 16, 2024
businessday logo

BusinessDay

First Citizen Bank to acquire SVB

First Citizen Bank to acquire SVB

First Citizens Bank and Trust company has agreed to purchase and assume all deposits and loans of Silicon Valley Bank, SVB, is a California lender that served as the lifeblood to thousands of startups before its collapse on March 10, 2023, after a bank run, marking the second-largest bank failure in United States history and the largest since the 2008 financial crisis.

According to a statement by the Federal Deposit Insurance Corporation (FDIC), the deal includes the purchase of about $72 billion assets of Silicon Valley Bank at a discount of $16.5 billion. About $90 billion in securities and other assets of the California-based lenders will remain “in receivership of disposition” by the FDIC.

The announcement comes weeks after the FDIC seized control of Silicon Valley Bank after a run on deposits made the lender insolvent. The 17 former branches of Silicon Valley Bank will open as First Citizens Bank on Monday, the FDIC said.

Read also: Access Bank Zambia gets nod to merge with Atlas Mara Zambia

However, the customers of the bank should continue to use their current branch. Going forward they will get a notice from First–Citizens Bank & Trust Company prompting that the system’s conversions have been completed. So, only after the completion, bank services at all the locations will be allowed.

The collapse of Silicon Valley Bank rattled the banking industry, especially regional banks, prompting the FDIC to move to transfer all SVB deposits into a new “bridge bank” to protect depositors. Shortly afterward, the Federal Reserve provided relief to the depositors of the lender by ensuring they were fully protected. Depositors gained access to all of their money starting March 13.

“In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, a common stock with a potential value of up to $500 million,” the FDIC said in a statement.