First Citizens Acquire Silicon Valley Bank from FDIC

US-based First Citizens BancShares Inc has reached an agreement to procure the SVB that was seized by the regulators following a wave of withdrawals from the lenders. Silicon valley bank the focused lender on March 10th became the largest bank to fail since the 2008 financial crisis in a collapse that broiled global markets. The acquisition will expand First Citizens’ presence in the technology and innovation hub of Silicon Valley, and will make it one of the largest banks in the US. 

Seventeen former SVB branches will open as First Citizen branches on Monday. First Citizen acquires about $72 billion in SVB assets at a discount of $16.5 billion and the estimated cost of SVB’s failure to FDIC’s deposit insurance fund is about $20 billion, the FDIC said.

Securities and other assets worth around $90 billion will be held by the FDIC for disposition, according to the statement. The FDIC has been granted equity appreciation rights in First Citizens that could be worth up to $500 million. 

According to the official statement, “this has been a remarkable transaction in partnership with the FDIC that should instil confidence in the banking system,” Frank Holding Jr., chief executive officer of First Citizens, said.

The collapse of SVB little more than two weeks ago has reverberated around the world, sending US depositors fleeing smaller banks for larger cousins while the hit to confidence forced Credit Suisse into the arms of rival UBS last week. The bank took a huge loss on sales of its securities amid rising interest rates, unnverving investors and depositors who rapidly began. On March 9th alone investors and depositors tried to withdraw about $ 42 billion.

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