First Citizens Bank has agreed to purchase “substantially all loans and certain other assets” of failed Silicon Valley Bank.
In its takeover, First Citizens will also “assume all customer deposits and certain other liabilities of Silicon Valley Bridge Bank” starting Monday.
Silicon Valley Bridge Bank was created after federal regulators seized Silicon Valley Bank earlier this month, after a sudden run on deposits.
First Citizens said the former bank’s 17 branches will reopen as “Silicon Valley Bank, a division of First Citizens Bank.”
The sale includes the acquisition of $72 billion in assets at a discount of $16.5 billion, according to the Federal Deposit Insurance Corporation (FDIC). First Citizens Bank will now manage all of SVB’s loans and deposits while the FDIC will retain about $90 billion in securities and other assets.
SVB’s depositors will “automatically become depositors of First Citizens Bank,” according to the FDIC, which will continue to insure deposits.
“This has been a remarkable transaction in partnership with the FDIC that should instill confidence in the banking system,” First Citizens Bank CEO Frank Holding Jr. said in a statement according to Bloomberg.
SVB’s depositors are largely tech industry-based customers, many of them start-ups. The Bank’s collapse stimulated a crisis in confidence among many of the United States’ regional banks. Just days after SVB failed, New York City’s Signature Bank, a key financial institution for the cryptocurrency industry, also failed.
Silicon Valley and Signature were the United States’ second and third largest bank collapses, respectively, after Washington Mutual’s failure amid the 2008 financial crisis that led to the Great Recession.
