First Citizens reportedly nearing deal to acquire Silicon Valley Bank

Silicon Valley Bank could soon be acquired through an auction by First Citizens Bank with a deal being announced as early as Sunday, according to reports.

First Citizens, which previously placed a bid to buy Silicon Valley Bank (SVB) through the auction held by Federal Deposit Insurance Corporation (FDIC), is reportedly in advanced talks to acquire the failed bank according to a report by Bloomberg that cited sources familiar with the matter.

The FDIC has been marketing SVB as two entities for prospective bidders – the Silicon Valley Bridge Bank, which holds its consumer deposits, and the Silicon Valley Private Bank, which offers wealth management services for high-net-worth clients. Bids in the latest auction for Silicon Valley Private Bank were due Wednesday, while bids for Silicon Valley Bridge Bank were due Friday. 

It’s unclear at this time whether First Citizens would acquire one entity or both if the deal is finalized. The FDIC declined to comment on any submitted or accepted bids for SVB.

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Initial efforts to sell SVB as a single entity failed to attract a buyer and First Citizens reportedly put in a low bid that was rejected. First Citizens Bancshares is the nation’s 30th-largest bank according to Federal Reserve data and is headquartered in Raleigh, North Carolina.

Silicon Valley Bank was the nation’s 16th-largest bank prior to its failure amid a bank run on March 10th, which made it the largest U.S. bank to fail since the 2008-09 financial crisis. The bank’s headquarters in Santa Clara, California, made it a popular lender for tech start-ups.

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SVB had an unusually large base of uninsured deposits, which amounted to more than 93% of its total deposit, and was also overexposed to interest rate risk through its holdings of long-term Treasury securities. 

Those dynamics contributed to SVB’s financial distress as interest rates rose amid the Federal Reserve’s efforts to tamp down inflation, which cratered the value of its bond portfolio because higher interest rates depress the price of bonds. 

Ticker	Security	Last	Change	Change %
SIVB	NO DATA AVAILABLE	-	-	-
FIZN	FIRST CITIZEN A	56.25	+0.00	+0.00%

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When SVB was forced to sell some of its bond holdings at a substantial loss to maintain sufficient liquidity for its customers, more clients moved to withdraw their funds as concern about the bank’s viability mounted, exacerbating the bank’s woes and leading to its failure amid the bank run.

Reuters contributed to this report.