WASHINGTON – The failed Silicon Valley Bank (SVB) has a new owner. The Federal Deposit Insurance Corporation (FDIC) said it has entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank by First-Citizens Bank & Trust Company, Raleigh, N.C.
The 17 former branches of Silicon Valley Bridge Bank have now opened as First-Citizens Bank & Trust, with the FDIC advising customers of Silicon Valley Bridge Bank, National Association to continue using their current branch until they receive notice from First-Citizens that systems conversions have been completed to allow full-service banking at all of its other branch locations.
According to the FDIC, as of March 10, Silicon Valley Bridge Bank had approximately $167 billion in total assets and about $119 billion in total deposits. The transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank’s assets at a discount of $16.5 billion, the FDIC said.
The agency said approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC.
In addition, the FDIC said it received equity appreciation rights in First Citizens BancShares’ common stock with a potential value of up to $500 million.
Loss-Share Transaction
The FDIC said it and First-Citizens Bank & Trust Company has entered into a loss-share transaction on the commercial loans it purchased of the former Silicon Valley Bridge Bank, National Association.
“The FDIC as receiver and First-Citizens Bank & Trust Company will share in the losses and potential recoveries on the loans covered by the loss-share agreement,” the FDIC said. “The loss-share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers. In addition, First-Citizens Bank & Trust Company will assume all loan-related Qualified Financial Contracts.”
Estimated $20 Billion Loss
The FDIC is estimating the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership.
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