First-Citizens Bank Acquires Silicon Valley Bridge Bank

First-Citizens Bank's Strategic Acquisition

First-Citizens Bank has successfully acquired Silicon Valley Bridge Bank (SVBB), marking a significant move in the banking sector. This acquisition includes 17 former SVB branches, which are set to reopen under the First-Citizens Bank name. The transaction involves purchasing $72 billion of SVBB’s assets at a discounted rate of $16.5 billion.

FDIC's Role in the Transition

The US Federal Deposit Insurance Corporation (FDIC) played a pivotal role in facilitating this acquisition. Following the closure of Silicon Valley Bank by the California Department of Financial Protection and Innovation, the FDIC established the bridge bank to stabilize and market the franchise. This strategic move allowed the FDIC to manage the transition effectively.

Implications for Deposit Holders

As part of the agreement, First-Citizens Bank has assumed all deposits and loans of SVBB. This means that depositors of the former bank automatically become customers of First-Citizens Bank, with their deposits insured by the FDIC up to the insurance limit. Customers are advised to continue using their existing branches until notified of system updates.

Financial Details of the Deal

The acquisition deal not only includes a significant asset purchase but also leaves approximately $90 billion in securities and other assets for the FDIC to manage. Additionally, the FDIC has gained equity appreciation rights in First Citizens BancShares, Inc., potentially valued up to $500 million.

Historical Context and Impact

Silicon Valley Bank had been an early adopter of cryptocurrencies, partnering with Coinbase in 2015 to offer bitcoin services. Despite its innovative approach, the bank's failure resulted in a substantial cost to the FDIC’s Deposit Insurance Fund, estimated at around $20 billion. The final financial impact will be clearer once the FDIC winds up the receivership.