First Citizens Bank buys assets of U.S. failed peer Silicon Valley Bank

U.S. regional bank First Citizens BancShares, Inc. announced on Monday that its subsidiary First-Citizens Bank &Trust Company entered an agreement with the Federal Deposit Insurance Corporation (FDIC) to buy all loans and assume all customer deposits of failed Silicon Valley Bank.

First Citizens Bank will purchase 110 billion U.S. dollars of assets from Silicon Valley Bridge Bank, N.A., which was created by the FDIC following the collapse of Silicon Valley Bank on March 10, according to First Citizens BancShares.

Included are 35.26 billion U.S. dollars of cash, 72.11 billion U.S. dollars of gross loans and 2.7 billion U.S. dollars of other assets.

Meanwhile, First Citizens Bank will assume 93.63 billion U.S. dollars of liabilities from Silicon Valley Bridge Bank, N.A. including 56.49 billion U.S. dollars of deposits, 34.6 billion U.S. dollars of borrowings and 2.54 billion U.S. dollars of other liabilities.

First Citizens Bank sealed the deal through a competitive bidding process with a discount of 16.45 billion U.S. dollars, according to a release by First Citizens BancShares.

Silicon Valley Bridge Bank had about 167 billion U.S. dollars of total assets and around 119 billion U.S. dollars of total deposits as of March 10, when Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation and came under receivership of the FDIC.

The FDIC said around 90 billion U.S. dollars in securities and other assets under Silicon Valley Bridge Bank would remain in the receivership for disposition.

"First Citizens Bank will additionally receive an available line of credit from the FDIC for contingent liquidity purposes. In addition, First Citizens Bank has entered into a loss share agreement with the FDIC to provide further downside protection against potential credit losses," said First Citizens BancShares in a release.

Starting from Monday, the 17 legacy Silicon Valley Bridge Bank, N.A. branches will begin operating as Silicon Valley Bank, a division of First Citizens Bank.

First Citizens BancShares said it has received all regulatory approvals and the transaction has closed.

As of the end of 2022, First Citizens BancShares, headquartered in Raleigh, North Carolina, has 550 branches and private banking offices in the United States with 109 billion U.S. dollars of assets and 89 billion U.S. dollars of deposits, according to a presentation by First Citizens BancShares.

The U.S. banking turmoil in recent collapses of tech-focused Silicon Valley Bank, and two crypto-centric lenders Signature Bank and Silvergate Bank sent shockwaves across global markets and raised concern about contagion risk.