First Citizens BancShares to acquire assets of Silicon Valley Bank
First Citizens BancShares will acquire SVB’s assets valued at $72 billion with a discount of $16.5 billion. This follows from the purchase agreement, according to a statement by the FDIC, Bloomberg reports.
Deposits of $56 billion were included in the deal’s scope. Seventeen branches of the institution under FDIC resolution will continue to operate under the same name. SVB clients will not notice any changes in the bank’s operations.
$90 billion in securities and other assets of Silicon Valley Bank will remain with the FDIC. The estimated cost of SVB’s bankruptcy will be $20 billion. The exact figure will be determined after the conclusion of the receivership.
The agency secured rights to increase the purchase consideration for the buyer by up to $500 million.
The agency highlighted First Citizens’ track record in acquiring troubled rivals. Since 2009, the institution has completed more than 20 such deals.
As with Signature Bank, the group has been unable to find a buyer for SVB in its entirety.
According to Reuters, the FDIC asked banks interested in acquiring Silicon Valley Bank and Signature Bank to refrain from any involvement with cryptocurrencies. A agency spokesperson, citing earlier remarks by its head Martin Gruenberg, said such suggestions were incorrect. Previously, in a similar vein the NYDFS staff stated likewise.
On March 10, the California Department of Financial Protection and Innovation closed SVB due to “insufficient liquidity and insolvency” and handed it over to the FDIC.
On March 13, U.S. authorities began the resolution of Silicon Valley Bank and Signature Bank.
Regulators said that depositors would gain access to their deposits at the expense of shareholders and some unsecured bondholders.
Amid SVB’s collapse, the stablecoin USDC and the algorithmic stablecoins DAI and FRAX lost their peg to the U.S. dollar. Later, Circle, the issuer of USDC, gained access to $3.3 billion of deposits in the failed bank.
Earlier, the IMF warned of the adverse impact of cryptocurrencies on lending institutions.
As noted earlier, the co-emittors of the USDC stablecoin — Circle and Coinbase — said that problems in the banking sector led to uncertainty in the digital asset markets.
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