First Citizens Bank Enters Deal With FDIC to Buy Silicon Valley Bank

By Alys Key

First Citizens Bank will take on the deposits and loans of the failed Silicon Valley Bank, the U.S. Federal Deposit Insurance Corporation (FDIC) said on Monday.

The deal includes the purchase of $72 billion in SVB assets for a discount of $16.5 billion.

The FDIC will keep another $90 billion in securities and assets to sell on the open market in a process known as “disposition.”

“We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation's banking system," said First Citizens chairman and CEO Frank B. Holding in a statement today.

First Citizens, a 125-year-old institution with a focus on North Carolina and South Carolina, had around $100 billion in total assets prior to the deal. Importantly, the First Citizens chairman and CEO said the acquisition would mean that the bank would continue to serve various startup-centric and VC clients.

“We are committed to building on and preserving the strong relationships that legacy SVB's Global Fund Banking business has with private equity and venture capital firms,” he said.

All 17 of the former SVB branches in California and Massachusetts were due to reopen under the First Citizens brand on Monday, with customers urged to use their current branch until they receive notice that they can use any of the new owner’s locations.

The deal is structured as a whole bank purchase with loss share coverage, which means that FDIC will share in the losses and potential recoveries on loans covered by the agreement.

Crisis averted?

The move marks the closing of at least the first chapter of a crisis that has swept numerous crypto companies up in its midst.

Firms including Ripple, Circle, and bankrupt BlockFi all had exposure to SVB.

Many will be hoping the deal marks the end of a period of uncertainty, which was also marked by the closure of crypto-friendly bank Silvergate and the failure of Signature Bank.

In Europe, too, the shotgun buyout of Credit Suisse by its rival UBS raised fears of a banking crisis.

But trouble for the banking industry, which spooked the stock markets, had the opposite effect on the price of Bitcoin, which is still at its highest levels since June last year.

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