First Citizens To Acquire Collapsed Silicon Valley Bank In Major Deal

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Jason Cohen Contributor
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The Federal Deposit Insurance Corporation (FDIC) announced Sunday night that First Citizens BancShares made a deal to acquire Silicon Valley Bank (SVB), the recently failed tech lender.

On March 10, the federal regulator took over SVB following a bank run that caused it to collapse. The FDIC then sought a buyer for the bank, either as a whole or in segments, and found one in First Citizens in a transaction including $72 billion in assets — a discount of $16.5 billion, according to the FDIC statement.

About $90 billion in SVB’s securities and other assets were not part of the acquisition and will stay in the ownership of the FDIC, according to the statement. The FDIC also will get equity appreciation rights tied to the stock of First Citizens, which may be worth up to $500 million, according to the statement. (RELATED: After Collecting Millions From Wall Street, Janet Yellen Now Helps Decide Which Banks Get Bailouts)

Federal Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, DC, on March 22, 2023. (Photo by OLIVIER DOULIERY/AFP via Getty Images)

The federal regulator estimated SVB’s failure will cost the FDIC’s Deposit Insurance Fund (DIF) roughly $20 billion.

SVB’s 17 former branches opened as First-Citizens Bank & Trust Company on Monday. Its depositors automatically transferred to First Citizens and will be insured by the FDIC’s $250,000 cap, according to the statement.

SVB was the 16th-largest bank in the U.S. and its failure was the largest in the nation since 2008.

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