First Citizens buys Silicon Valley Bank for $72 billion

First Citizens, an entity based in Raleigh, North Carolina, will take over the assets, deposits and loans of Silicon Valley Bridge Bank (SVB), according to a statement from the Federal Deposit Insurance Corporation (FDIC) of the United States.

The operation includes the purchase of US$ 72,000 million of assets with a discount of 16,500.

In its note, the FDIC explains that SVB’s 17 branches will open as First–Citizens Bank & Trust Company this Monday, and clarifies that customers should continue to use their current location until they receive notice that system conversions have been completed.

SVB depositors will automatically become First–Citizens Bank & Trust Company depositors, and all assumed deposits will continue to be FDIC-insured up to the insurance limit.

As of March 10, SVB had about $167 billion in assets and $119 billion in deposits; about $90 billion will remain in receivership for disposal by the FDIC, the note indicates.

In addition, the FDIC received capital appreciation rights in First Citizens common stock worth approximately $500 million.

The US FDIC estimates that the cost of bankruptcy for Silicon Valley Bank for its Deposit Insurance Fund (DIF) is approximately US$ 20,000 million, although the exact amount will be known when the judicial administration is concluded.

The creation of Silicon Valley Bridge Bank was intended to give the FDIC time to “to stabilize the institution and market the franchise”the statement continues.