Can a North Carolina-based bank hold into Silicon Valley Bank’s customers?
Culture Clash much? The Federal Deposit Insurance Corporation (FDIC) sold a chunk of Santa Clara, Calif.-based Silicon Valley Bank to Raleigh, North Carolina-based First Citizens Bancshares.
Here are the highlights:
The FDIC took over SVB on March 10 creating Silicon Valley Bridge Bank (SVBB) “after clients withdrew $42 billion in a single day,” according to CNN.
On March 26, the FDIC announced a deal to sell part of SVB to First Citizens, which ended 2022 with $111 billion in assets — a whopping 90% increase from the year before.
First Citizens will take on “$119 billion in SVB’s deposits and about $72 billion of SVB’s loans at a discount of $16.5 billion,” according to the FDIC.
First Citizens will not acquire about $90 billion of SVB’s securities which will remain in receivership, according to the Wall Street Journal.
The FDIC will receive equity appreciation rights in First Citizens stock worth “up to $500 million.”
The FDIC estimates that SVB’s failure will cost to its $128.2 billion deposit insurance fund “around $20 billion,” according to the New York Times NYT
What are the details of the deal? Why is First Citizens growing so fast? Can this Raleigh-based bank can hold onto Silicon Valley customers? Are more banking woes in our future? For answers, read on.First Citizens Acquires SVB Assets
Raleigh-based First Citizens — the country’s 30th largest bank at the end of 2022 with more than 500 branches across 22 states — will move into the top 25 U.S. banks in terms of assets in the wake of this deal. First Citizens is buying about $72 billion worth of SVBB loans at a discount. The FDIC will share First Citizens’ losses or potential gains on SVB’s commercial loans, according to the Wall Street Journal.
SVBB depositors will become First Citizens depositors over time. SVBB’s 17 former branches in California and Massachusetts will open March 27 as First–Citizens Bank & Trust Company.
