FDIC says First Citizens Bank has reached deal to purchase Silicon Valley Bank
Silicon Valley Bank in Santa Clara was closed by California authorities on Friday, March 10
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The Silicon Valley Bank finally has a buyer.
On Sunday, the Federal Deposit Insurance Corporation (FDIC) announced First-Citizens Bank & Trust Company of Raleigh, North Carolina entered a purchase agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association.
"The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023," the FDIC said in a statement.
"Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations," the statement continued.
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Silicon Valley Bank (SVB) logo is seen through broken glass in this picture illustration taken March 16, 2023. (REUTERS/Dado Ruvic/Illustration / Fox News)
Depositors of the Santa Clara, California-located bank will automatically become depositors of First–Citizens Bank & Trust Company, according to the statement, and all deposits will be assumed and insured by First–Citizens Bank & Trust Company, up to the insurance limit.
The FDIC said: "As of March 10, 2023, Silicon Valley Bridge Bank, National Association, had approximately $167 billion in total assets and about $119 billion in total deposits. Today's transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association's assets at a discount of $16.5 billion."
In addition, approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC.
Federal Deposit Insurance Corporation (FDIC) building is seen in Virginia, United States on March 17, 2023. (Celal Gunes/Anadolu Agency via Getty Images / Getty Images)
According to the statement, the FDIC and First–Citizens Bank & Trust Company entered into a "loss–share transaction" on all commercial loans it purchased from Silicon Valley Bank (SVB).
FIRST CITIZENS REPORTEDLY NEARING DEAL TO ACQUIRE SILICON VALLEY BANK
"The FDIC as receiver and First–Citizens Bank & Trust Company will share in the losses and potential recoveries on the loans covered by the loss–share agreement. The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers. In addition, First–Citizens Bank & Trust Company will assume all loan–related Qualified Financial Contracts," the FDIC said.
SVB (Silicon Valley Bank) logo is seen in this illustration taken March 19, 2023. (REUTERS/Dado Ruvic / Fox News)
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The FDIC estimated SVB's failure cost approximately $20 billion, although a cost will be more accurately determined when the FDIC terminates the receivership, it said.
The FDIC created Silicon Valley Bridge Bank after the California Department of Financial Protection & Innovation closed Silicon Valley Bank on Friday, March 10. All of the deposits—both insured and uninsured—were transferred to the bridge bank.