First Citizens Bank has acquired the majority of the tech lender Silicon Valley Bank, which collapsed earlier this month and generated banking troubles across the US and Europe.
Late on Sunday, the Federal Deposit Insurance Corporation (FDIC) announced that it had reached an agreement with First-Citizens Bank & Trust Company to purchase all of Silicon Valley Bank deposits and loans, which had been moved to a bridge bank by regulators after SVB collapse, per CNN.
On Monday, First Citizens announced that 17 former SVB locations will resume operating as "Silicon Valley Bank, a division of First Citizens Bank."
The FDIC advised that SVB clients should utilize their present branch until First Citizens notifies them that procedures have been changed to offer full service at its larger network of branches, according to CNBC.
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First Citizens Bank Shares Jump
In early Wall Street trading, First Citizens Bank stock increased by more than 40% following its purchase of Silicon Valley Bank.
SVB assets worth $72 billion were purchased at a discount of $16.5 billion, while $90 billion in securities and other assets would stay under receivership for disposal by the FDIC.
Furthermore, the FDIC noted that it obtained "equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, a common stock with a potential value of up to $500 million."
The SVB acquisition follows a similar one for Signature Bank, whose operations were sold to Flagstar, which is controlled by New York Community Bank, a week earlier.
As part of that settlement, the FDIC was compelled to maintain $60 billion worth of Signature's loans. The federal agency has calculated that the collapse and settlement of Signature bank might amount to the FDIC's insurance fund of $2.5 billion, according to the Financial Times.
When customers withdrew $42 billion in a single day from SVB on March 10, authorities took over the bank. The SVB collapse was the second-largest bank failure in American history, following Washington Mutual in 2008.
Deposits exceeding $250,000 per account were guaranteed by the FDIC.
The Raleigh, North Carolina-based First Citizens Bank provides standard banking services via its network of over 550 branches and offices located throughout 23 different states.
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