First-Citizens Bank has reached a deal to acquire the assets of Silicon Valley Bank about two and a half weeks after the Santa Clara, California-based bank collapsed, the Federal Deposit Insurance Corporation announced early Monday morning.
The 17 former branches of Silicon Valley Bank are open as First–Citizens Bank & Trust Company as of Monday, according to the FDIC, and all depositors with SVB will automatically become depositors of First–Citizens Bank. The Raleigh, North Carolina-based bank has assumed all deposits of SVB, estimated to be more than $119 billion.
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“The FDIC and First–Citizens Bank & Trust Company entered into a loss–share transaction on the commercial loans it purchased of the former Silicon Valley Bridge Bank, National Association. 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 FDIC announced in its press release.
SVB was taken over by regulators as Silicon Valley Bridge Bank after the California Department of Financial Protection and Innovation closed SVB due to its collapse. The purpose of establishing Silicon Valley Bridge Bank, according to the FDIC, was to allow time for the agency to “stabilize the institution and market the franchise.”
The FDIC estimated that the cost of the failure of SVB to its Deposit Insurance Fund (DIF) is approximately $20 billion, but the exact cost will be determined when the FDIC “terminates the receivership.”
On March 9, a day after suddenly announcing that it needed to raise $2.2 billion, the SVB was closed, with the FDIC moving its remaining assets to the newly created Deposit Insurance National Bank of Santa Clara.
The bank’s collapse raised questions as to which banks were misjudging the cost and lifespan of their deposits. The yield and duration of their assets were also called into question. These fears manifested in the tanking of several leading bank stocks as depositors scrambled to retrieve their money.
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Customers can find more information about the transaction on the FDIC website.
