RALEIGH: First Citizens BancShares on Monday agreed to buy the failed Silicon Valley Bank (SVB), closing a chapter in the crisis of confidence that has ripped through global financial markets.
The bank said it will acquire all deposits and loans of SVB from the Federal Deposit Insurance Corporation (FDIC).
First Citizens said the transaction was designed to preserve its solid financial position and the combined company remains resilient with a diverse loan portfolio and deposit base.
The FDIC which took control of SVB earlier this month, in a separate statement, confirmed receiving equity appreciation rights in First Citizens BancShares stock with a potential value of up to $500 million as part of the deal.
The agreement
Under the agreement, unit First Citizens Bank & Trust Company will assume SVB assets of $110 billion, deposits of $56 billion and loans of $72 billion.
The Raleigh-based bank will also receive a line of credit from the FDIC for contingent liquidity purposes and will get into a loss-sharing agreement with the regulator to protect against potential credit losses.
The 17 former branches of SVB will open as First–Citizens banks on Monday. First Citizens has around $109 billion in assets and total deposits of $89.4 billion. SVB was the largest bank since the 2008 financial crisis to collapse when it was closed by California regulators on March 10, sparking largescale market disruption and heightening tensions across the banking sector globally.
