First-Citizens Bank Announces Official Purchase of Silicon Valley Bank

First-Citizens Bank & Trust Companyone of the largest banks in the United States, bought the bankrupt Silicon Valley Bridge Bank and all its deposits and loans, last Sunday, March 26, according to the Federal Deposit Insurance Corporation (FDIC).

The operation includes $72 billion in assets at a discount of $16.5 billion and $119 billion in deposits. Also, from this Monday, the 17 former branches of the SVB will open as First-Citizens Bank & Trust Company.

“Today’s transaction included the purchase of approximately $72 billion of the assets of Silicon Valley Bridge Bank, National Association at a discount of $16.5 billion. Approximately $90 billion of securities and other assets will remain in receivership for disposition by part of the FDIC. In addition, the FDIC received appreciation rights to common stock of First Citizens BancShares, Inc., Raleigh, North Carolina, with a potential value of up to $500 million,” the FDIC statement said.

Thus, depositors of the SVB will automatically become depositors of First-Citizens Bank & Trust Company. “All deposits assumed by First-Citizens Bank & Trust Company will continue to be FDIC insured up to the limit of the insurance,” the letter added.

It should be noted that the FDIC and First-Citizens Bank & Trust Company have entered into a loss-sharing transaction on the commercial loans that were purchased.

“The loss-sharing transaction is expected to maximize recoveries on assets by keeping them in the private sector. The transaction is also expected to minimize disruptions to loan customers. In addition, First-Citizens Bank & Trust Company will assume all of the Contracts Qualified Financiers related to loans”, can be read in the statement.

He BLS it had, to date, about $167 billion in total assets and about $119 billion in total deposits. And the FDIC estimates that $20 billion will be the cost of the SVB’s collapse to its Deposit Insurance Fund (DIF).

With information from AFP