First Citizens buys much of failed Silicon Valley Bank

First Citizens Bancshares Inc., one of the nation's largest regional banks, is buying big pieces of Silicon Valley Bank more than two weeks after the lender's collapse sent tremors through the banking system.

- Andrew Ackerman

The Federal Deposit Insurance Corp. said First Citizens is acquiring all of Silicon Valley Bank's deposits, loans and branches, which will open Monday morning under the new ownership.

The purchase includes $119 billion in deposits and about $72 billion of SVB's loans at a discount of $16.5 billion. Some $90 billion of SVB's securities will remain in receivership.

Regulators took control of Santa Clara, Calif.-based SVB on March 10. The collapse sparked a panic that led to the weekend failure of Signature Bank and a dramatic intervention by financial regulators aimed at easing fears that depositors would flee smaller lenders.

The sale represents a milestone in regulatory efforts to clean up after two of the largest bank failures in history, at a time when investors are on edge about the health of the global financial system.

First Citizens, based in Raleigh, N.C., was the 30th largest U.S. bank as of 31 December 2022, with $109 billion in assets, according to the Federal Reserve. Monday's deal would put the firm in the top 25 US banks in terms of assets.

The FDIC agreed to share any of First Citizens' losses or potential gains on SVB's commercial loans. Overall, the FDIC estimated the failure of SVB will cost a federal insurance fund it oversees about $20 billion, or roughly 10% of the bank's assets before its failure.

"We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation's banking system," First Citizens Chief Executive Frank Holding Jr. said in a news release.

The worries about American banks center on regional lenders that are perceived to be subject to the threat of deposit flight. Both SVB and Signature had large amounts of uninsured deposits-or customers with more than the standard insurance cap of $250,000 per depositor.