The crash of Silicon Valley Bank (SVB) had sent shockwaves across the world. In the latest development, First Citizens Bank has agreed to buy the embattled start-up lender. SVB has been under the control of the Federal Deposit Insurance Corporation (FDIC) ever since it became the biggest US bank to fail in over a decade.
FDIC reached an agreement with First Citizens for all loans and deposits of Silicon Valley Bridge Bank. All 17 branches of SVB will open as First Citizens starting today. First Citizens received $72 billion of SVB’s assets at a discount of $16.5 billion. SVB had $169 billion in assets and $119 billion in deposits.
SVB’s rapid implosion shook the foundation of the global financial system. The bank’s fall created a sense of panic among customers around the world. Authorities have been scrambling to find a deal to bring a sense of calm to the financial system. The acquisition of SVB by First Citizens should send a sign of reassurance that the banking system is still structurally sound.
Even after the sale, $90 billion of SVB’s assets will remain in the receivership of FDIC. The federal body also received equity appreciation rights in First Citizens Bancshares worth as much as $500 million.