SVB Collapse: First Citizens Bank Acquiring Silicon Valley Bridge Bank

Posted on by TMN Editor
Silicon Valley Bank

By KIMBERLEY HAAS

Leaders at First Citizens Bank and Trust Company have entered into an agreement to acquire Silicon Valley Bridge Bank.

Silicon Valley Bridge Bank was created by officials at the Federal Deposit Insurance Corporation on March 13 after the collapse of Silicon Valley Bank. All deposits, insured and uninsured, substantially all assets, and all qualified financial contracts of Silicon Valley Bank were transferred to the bridge bank.

According to a press release, through an agreement with officials at the FDIC, First Citizens will assume Silicon Valley Bridge Bank’s assets of $110 billion, deposits of $56 billion, and loans of $72 billion.

“Today’s transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association’s assets at a discount of $16.5 billion,” officials at the FDIC said on Sunday.

Officials said approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares common stock with a potential value of up to $500 million.

First Citizens BancShares has more than $219 billion in assets, according to company leaders.

First Citizens, founded in 1898 and headquartered in Raleigh, N.C., was selected for the acquisition through a competitive bidding process.

Frank Holding, Jr., chairman and CEO of First Citizens, said in a statement that they have successfully worked with the FDIC before.

“We have partnered with the FDIC to successfully complete more FDIC-assisted transactions since 2009 than any other bank, and we appreciate the confidence the FDIC has placed in us once again. 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,” Holding said.

Holding said this transaction leverages the company’s foundation to add significant scale, geographic diversity, compelling digital capabilities, and meaningful solutions for customers. The bank has more than 550 branches and offices in 23 states.

“Specifically, 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. This transaction also will accelerate our expansion in California and introduce wealth capabilities in the Northeast. SVB’s Private Wealth business is a natural fit for our high-touch and sophisticated level of high-net-worth customer service and approach,” Holding said.

The 17 former Silicon Valley Bridge Bank branches will operate as Silicon Valley Bank, a division of First Citizens Bank.

Customers should continue to use their current branch until they receive notice that systems conversions have been completed to allow for banking at other locations, officials said.

When Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation on March 10, it was the biggest bank failure since Washington Mutual in 2008. The banking sector has been disrupted globally by heightened stresses since the collapse.

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