Silicon Valley Bank has been sold to First Citizens Bank and Trust Company. The Federal Deposit Insurance Corp. (FDIC) has reached an agreement with First Citizens Bank to acquire the deposits and loans of Silicon Valley Bank following its recent failure.
Silicon Valley Bank acquisition is underway
As per Bloomberg’s report, the deal was in the works and was announced on Sunday night U.S. time. The FDIC has confirmed that all depositors of Silicon Valley Bridge Bank, which was established by the FDIC after SVB’s failure, will become depositors of First Citizens Bank & Trust Company.
Additionally, all deposits that will be taken on by First Citizens Bank & Trust Company will continue to be insured by the FDIC, ensuring that depositors are protected up to the insurance limit. This acquisition by First Citizens Bank will help to mitigate the impact of the Silicon Valley Bank failure and will provide greater stability to its customers.
Silicon Valley Bank asset size
Silicon Valley Bridge Bank had around $167 billion in assets and nearly $119 billion in deposits as of March 10. To help address the bank’s failure, the FDIC has purchased approximately $72 billion of the bank’s assets at a discounted rate of $16.5 billion. However, securities and other assets worth around $90 billion will remain in receivership until they are disposed of by the FDIC.
As part of the agreement, the FDIC has also obtained equity appreciation rights in First Citizens BancShares, the parent company of First Citizens Bank. These rights could potentially be valued at up to $500 million, pending market conditions.
Who bought Silicon Valley Bank?
This acquisition by First Citizens Bank and the FDIC’s role in securing the bank’s assets will provide some relief to depositors who had placed their trust in Silicon Valley Bridge Bank, and help to ensure a stable and reliable banking environment for the future.
The FDIC has estimated that the failure of Silicon Valley Bank has cost its Deposit Insurance Fund roughly $20 billion. The exact cost will be determined after the FDIC concludes the receivership. It remains to be seen how many former clients of Silicon Valley Bank will remain with First Citizens following the acquisition.
After the bank run, established banks such as Citi and First Republic, as well as fintech neobanks, aggressively sought out Silicon Valley Bank’s clients, resulting in a loss of business for the bank. However, the acquisition by First Citizens Bank and Trust Company will help to restore stability and provide assurance to clients who have been affected by the recent events.
First Republic Bank share price
Since the acquisition of Silicon Valley Bank by First Citizens Bank and Trust Company, the share price of First Republic Bank has been on the rise. While it is currently trading at $12.36, the bank is among the established institutions that aggressively sought out Silicon Valley Bank’s clients following the bank’s failure.
As the banking industry continues to adjust to the effects of Silicon Valley Bank’s failure, it is likely that established institutions like First Republic Bank will continue to see an increase in their share prices.
With the acquisition of Silicon Valley Bank’s deposits and loans, First Citizens Bank and Trust Company has taken a major step toward restoring stability to the industry, and it will be interesting to see how the industry continues to evolve in the months and years ahead.