Troubled Silicon Valley Bank acquired by First Citizens 

A FIRST CITIZENS Bank sign is seen in Durham, North Carolina. North Carolina-based First Citizens will buy Silicon Valley Bank, the tech industry-focused financial institution that collapsed earlier this month. ASSOCIATED PRESS / JONATHAN DREW

NEW YORK (AP) – First Citizens will acquire much of Silicon Valley Bank, the tech-focused financial institution that collapsed this month, setting off a chain reaction that caused a second bank to fail and tested faith in the global banking sector. 

The Federal Deposit Insurance Corp. and other regulators had already taken extraordinary steps to head off a wider banking crisis by guaranteeing that depositors in SVB and failed Signature Bank would be able to access all of their money. 

While more than half of Silicon Valley’s assets will remain in U.S. receivership, the First Citizens deal announced late Sunday, at least initially, seemed to achieve what regulators have sought: a shoring up of trust in U.S. regional banks. 

Customers of SVB will automatically become customers of First Citizens, which is headquartered in Raleigh, North Carolina. The 17 former branches of SVB will open as First Citizens branches Monday, the FDIC said. 

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Reuters reported last week that Providence-based Citizens Financial Group Inc was working on a bid to acquire the private banking business of  Silicon Valley Bank, SVB Private.

SVB Private provides banking, wealth management and trust services to high-net worth individuals. A big part of it comprises Boston Private, a wealth manager acquired by Silicon Valley Bank in 2021.

The FDIC tried to sell SVB Private alongside Silicon Valley Bank over the last two weekends after the technology-focused lender was taken over by regulators on March 10. But it failed to clinch a deal to sell them both together.

Silicon Valley, based in Santa Clara, Calif., collapsed March 10 in a bank run after customers rushed to withdraw money due to fears over the bank’s solvency. It was the second-largest bank collapse in U.S. history after the 2008 failure of Washington Mutual. Two days later, New York’s Signature Bank was seized by regulators in the third-largest bank failure in the U.S. 

In both cases, the government agreed to cover deposits, even those that exceeded the federally insured limit of $250,000, so depositors were able to access their money. 

New York Community Bank agreed to buy a significant chunk of Signature Bank in a $2.7 billion deal a week ago, but the search for a buyer for SVB took longer. 

The sale of Silicon Valley Bank involves the sale of all deposits and loans of SVB to First-Citizens Bank and Trust Co., the FDIC said. 

The acquisition gives the FDIC shares in First Citizens worth $500 million. Both the FDIC and First Citizens will share in losses and the potential recovery on loans included in a loss-share agreement, the FDIC said. 

The FDIC will retain about $90 billion of Silicon Valley Bank’s $167 billion in total assets, as of March 10, while First Citizens will acquire $72 billion at a discount of $16.5 billion, the FDIC said. It said it estimates Silicon Valley Bank’s failure will cost its industry-funded Deposit Insurance Fund about $20 billion. 

First Citizens Bank was founded in 1898 and says it has more than $100 billion in total assets, with more than 500 branches in 21 states as well as a nationwide bank. It reported net profit of $243 million in the last quarter. It is one of the top 20 U.S. banks and says it is the largest family-controlled bank in the country. 

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