First Citizens To Buy Silicon Valley Bank In $72 Billion Asset Deal

Key Points:

• The deal includes purchasing about $72 billion SVB assets at a discount of $16.5 billion.
• Following the acquisition, about $90 billion in securities and other assets will remain in receivership for disposition by the FDIC.
• Silicon Valley Bank was the most significant US lender to fail in over a decade, and the estimated cost of the failure to the Deposit Insurance Fund is around $20 billion.

First Citizens BancShares agreed to buy Silicon Valley Bank, the largest US lender to fail in more than a decade, for $72 billion in assets at a discount of $16.5 billion, as per Bloomberg.

First Citizens BancShares Inc. has agreed to buy Silicon Valley Bank, which was seized by regulators following a run on the lender. The deal includes the purchase of about $72 billion SVB assets at a discount of $16.5 billion. About $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC, while the Federal institution also got equity appreciation rights in First Citizens worth as much as $500 million.

The estimated cost of the failure to the Deposit Insurance Fund is about $20 billion, though the exact extent will be determined when receivership is terminated. According to Frank Holding Jr., chief executive officer of First Citizens, the banking system is expected to be instilled with confidence due to this remarkable transaction in partnership with the FDIC.

The acquisition of Silicon Valley Bank by First Citizens is the second-largest FDIC-assisted bank failure in US history.

First Citizens is experienced in acquiring broken rivals and has completed over 20 FDIC-assisted bank acquisitions since 2009, striking deals from Washington to Pennsylvania after the financial crisis. The bank completed the acquisition of CIT Group Inc. last year in a deal valued at over $2 billion. As of the end of 2022, it was the 30th largest commercial bank in the US by assets.

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