The U.S. Federal Deposit Insurance Corporation said Monday that First Citizens Bank & Trust Co will buy Silicon Valley Bank’s deposits and loans.
CNBN reported that this information was revealed in a press release by FDIC after over two weeks since the SVB bank became defunct and shut down by regulators.
According to the statement, “approximately $72 billion of SVB assets will be acquired by the purchasing party at a discount of $16.5 billion.”
However, as the statement further notes, “around $90 billion in securities and other assets in receivership for disposition by the FDIC.”
In the press release, the FDIC said, “In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million.”
Stating on Monday, the FDIC said, “The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023.
“Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations.”
The agreement between First Citizens Bank and the FDIC includes a “loss-share transaction,” which means the FDIC taking on a portion of the loss related to a specific group of assets.
It was reported that this arrangement applies specifically to the commercial loans purchased from the SVB bridge bank.
It further reads, “The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers.”
According to the statement, the Deposit Insurance Fund will incur an estimated cost of approximately $20 billion due to the failure of SVB. However, the actual cost will be determined once the receivership is concluded.
