First Citizens Bank to Acquire Silicon Valley Bank, Expanding Reach to the Tech Industry
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The North Carolina-based bank has reached an agreement with the Federal Deposit Insurance Company (FDIC) to take over all of the Silicon Valley bank’s deposits and loans, which were transferred to an FDIC-built bridge bank after the collapse.
The acquisition has the potential to calm nervous investors upset by the sudden closure of California-based Silicon Valley Bank, which marked the biggest bank failure in the US since the 2008 financial crisis.
Under the terms of the acquisition, Silicon Valley Bank’s former customers will automatically become First Citizens depositors. Additionally, 17 former Silicon Valley branches will open Monday as the first Citizens branches, according to the FDIC.
While the FDIC and other regulators had already given guarantees to Silicon Valley Bank and Signature Bank depositors, protecting deposits that exceeded the federally insured $250,000 limit, the sale to First Citizens could reassure nervous investors.
First Citizens Bancshares CEO Frank Holding, Jr. expressed appreciation for the FDIC’s confidence in his company, saying, “We have partnered with the FDIC to successfully complete more FDIC-assisted transactions than any other bank since 2009.”
The FDIC will retain $90 billion of Silicon Valley Bank’s $167 billion in total assets as of March 10, while First Citizens will get $72 billion at a $16.5 billion discount, the FDIC said. The failure of New York’s Signature Bank was the second-largest bank failure since the 2008 financial crisis when the Silicon Valley bank closed.