First Citizens, a legacy banking institution founded in 1898, is acquiring Silicon Valley Bank, once triumphantly dubbed the "financial partner of the innovation economy" before its recent historic collapse.
SVB's loans and deposits just two weeks after the bank shocked the financial industry with its sudden implosion.
First Citizen announced the deal Monday in partnership with the Federal Deposit Insurance Corporation (FDIC), which previously seized SVB's assets. The new acquisition will see First Citizens secure $72 billion of SVB loans at a discount of $16.5 billion, as well as $56 billion in deposits. $90 billion in securities and other assets will "remain in receivership" from the FDIC.
Starting March 27, all of SVB's 17 legacy physical branches will start operating as a division of First Citizen Bank. First Citizens said the deal is the result of a multi-week competitive bidding process among multiple institutions.
First Citizen says the acquisition means former SVB customers will be able to continue to access their accounts in the same way as before, which means they can still use their old checking cards and withdraw money from the same variety of websites. , mobile applications and branches. locations. First Citizen says it has also entered into a loss-sharing agreement with the FDIC in which both entities will share potential loan losses in the transaction. That agreement, according to First Citizens, should "provide greater protection against potential credit losses."
US regulators moved to swiftly shut down Silicon Valley's largest bank earlier this month following a dramatic run on banks. The second-largest bank in US history, SVB was the bank of choice for the tech sector before its failure, reportedly serving nearly half of all VC-backed startups in the country.
Left unchecked, regulators believed that the sudden collapse of SVB could pose a systemic risk to the entire financial sector. US financial regulators quickly extended a guarantee to cover all deposits at the bank and promised customers would be in good standing. Regulators initially transferred all of SVB's deposits and assets to a new "bridge" bank called Silicon Valley Bridge Bank while they searched for a new buyer.
Source: Gizmodo
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