The Federal Deposit Insurance Corporation (FDIC) has reached an agreement to sell the assets and deposits of Silicon Valley Bridge Bank to the American bank First-Citizens Bank & Trust Company, the FDIC said in a statement.
Silicon Valley Bridge Bank is a bailout bank created by the FDIC, which received the assets and deposits of Silicon Valley Bank (SVB), which closed in early March.
“Depositors of Silicon Valley Bridge Bank will automatically become depositors of First-Citizens Bank & Trust Company. All deposits transferred to First-Citizens Bank & Trust Company will continue to be FDIC insured up to the insurance limit,” according to the press release. The FDIC insurance covers deposits up to $250,000.
On Monday, March 27, all 17 Silicon Valley Bridge Bank branches will begin operating as part of First-Citizens Bank & Trust.
As of March 10, Silicon Valley Bridge Bank had estimated assets of about $167 billion and deposits of $119 billion.
As part of the deal, First-Citizens will receive $72 billion in assets at a discount of $16.5 billion, according to the FDIC. First-Citizens will also assume a $56 billion deposit service obligation.
The bank’s $90 billion in securities and other assets will remain under regulatory management. In addition, the FDIC received rights to shares of First Citizens BancShares Inc. for up to $500 million. The regulator and First-Citizens also entered into an agreement to share losses on Silicon Valley Bridge Bank loans.
First-Citizens, which is registered in North Carolina, is only the 30th largest U.S. bank by assets, a figure estimated at about $109 billion, but Bloomberg notes that the bank has extensive experience in acquiring troubled competitors – since 2009 it has bought more than 20 banks that were forced to ask for help from the FDIC.
Silicon Valley Bank (SVB), the 16th largest bank in the U.S., announced its closure on March 11. The bank had provided banking services to many U.S. startups. The withdrawal of funds from deposits by SVB corporate clients to cover costs amid falling revenues, superimposed on the declining value of the securities portfolio due to tightening Fed policies, eventually led to the fact that the bank had to be placed under the management of the FDIC.
The FDIC tentatively estimates the cost of the deposit insurance fund in connection with the closure of SVB at about $20 billion.
First-Citizens Bank & Trust, Valley Bridge Bank
