London/Oakland, CaliforniaCNN —
First Citizens Bank is buying most of the business of Silicon Valley Bank, the US tech lender that failed earlier this month.
The Federal Deposit Insurance Corporation (FDIC) said in a statement late Sunday it had agreed that First-Citizens Bank & Trust Company (FCIZP) would buy all of SVB’s deposits and loans that regulators had transferred to a bridge bank in the wake of its collapse.
Seventeen former branches of SVB will begin operating as “Silicon Valley Bank, a division of First Citizens Bank,” on Monday, First Citizens said. SVB customers should continue to use their current branch until they receive notice from First Citizens that systems have been converted to allow full service at its wider branch network, FDIC added.
SVB was shut down by regulators on Friday, March 10, after clients withdrew $42 billion in a single day. It was the second-largest bank failure in US history, after Washington Mutual in 2008. The FDIC agreed to guarantee all deposits, including those above the $250,000 per account that are usually insured.
First Citizens, based in Raleigh, North Carolina, offers general banking services through more than 550 branches and offices in 23 states.
It said in a statement that it would assume SVB assets of $110 billion, deposits of $56 billion and loans of $72 billion, based on the latest information from the FDIC. It has also entered into an agreement with the FDIC that will protect the bank against potential losses on the commercial loans it is buying.
“This transaction leverages our solid foundation to add significant scale, geographic diversity, compelling digital capabilities and, most importantly, meaningful solutions for customers throughout their lifecycle,” First Citizens chairman and CEO Frank B. Holding said in the statement.
“Specifically, we are committed to building on and preserving the strong relationships that legacy SVB’s Global Fund Banking business has with private equity and venture capital firms,” he added.
The FDIC said First Citizens was getting the $72 billion in SVB loans at a discount of $16.5 billion. About $90 billion in securities and other assets that were owned by SVB will remain in receivership for disposition by the FDIC.
“The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership,” the regulator said.
The collapse of SVB, followed in quick succession by Signature Bank — another US regional lender — roiled global financial markets and triggered a collapse in confidence among investors and depositors in other vulnerable banks.
Switzerland’s second-biggest bank, Credit Suisse (CS), has been the largest casualty of the current crisis. It had to be rescued a week ago by bigger rival UBS (UBS) in an emergency takeover orchestrated by the Swiss government.
This article was originally published by CNN.
