First Citizens Bank acquires SVB deposits, loans

The FDIC announced late Sunday that First Citizens Bank & Trust of Raleigh, North Carolina, has agreed to purchase and assume all deposits and loans of Silicon Valley Bridge Bank, which was established after the closure of the California-based SVB. The bridge bank’s 17 branches opened as First Citizens branches today.

The transaction included the purchase of roughly $72 billion in SVB assets at a discount of $16.5 billion, according to FDIC. Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the agency. In addition, the FDIC received equity appreciation rights in First Citizens BancShares common stock with a potential value of up to $500 million.

The FDIC and First Citizens entered into a loss-share transaction on the commercial loans it purchased from the former SVB, according to the agency. The two will share in the losses and potential recoveries on the loans covered by the loss-share agreement. The loss-share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The FDIC estimates the cost of the failure of SVB to its Deposit Insurance Fund to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.