Collapsed Silicon Valley Bank sold to First-Citizens Bank

The Silicon Valley Bank (SVB) will be sold to First-Citizens Bank, the FDIC announced on Monday. Under the agreement, First Citizens will assume all deposits worth $119 billion and loans of SVB. The SVB was seized by regulators after its collapse following a bank run. Earlier, the UK arm of the collapsed lender was sold to HSBC for £1.

Customers of SVB Bank should continue to use their current branch until they receive notice from First–Citizens Bank

According to the press release by FDIC, The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023.  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.

Depositors of Silicon Valley Bridge Bank, National Association, will automatically become depositors of First–Citizens Bank & Trust Company. All deposits assumed by First–Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit. 

The transaction is also expected to minimize disruptions for loan customers

Silicon Valley Bridge Bank, National Association had over $167 billion in total assets as of March 10, 2023, and roughly $119 billion in total deposits. In today’s deal, assets worth around $72 billion from Silicon Valley Bridge Bank, National Association were purchased for a $16.5 billion discount. A total of $90 billion in securities and other assets will still be under receivership for the FDIC to sell. The First Citizens BancShares, Inc., Raleigh, North Carolina, common stock also came with equity appreciation rights that may be worth up to $500 million, which were given to the FDIC.

On the commercial loans it acquired from the old Silicon Valley Bridge Bank, National Association, the FDIC and First-Citizens Bank & Trust Company agreed into a loss-share deal. The losses and possible recoveries on the loans covered by the loss-share agreement will be split between the FDIC in its capacity as receiver and First-Citizens Bank & Trust Company. By retaining the assets in the private sector, the loss-share transaction is expected to increase recoveries on the assets. Additionally, the transaction is anticipated to cause the fewest hiccups for loan clients. In addition, any loan-related Qualified Financial Contracts will be assumed by First-Citizens Bank & Trust Company.

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