First-Citizens Bank & Trust (FCNCO) is purchasing the deposits and loans of now defunct Silicon Valley Bank for $72 billion U.S., according to the U.S. Federal Deposit Insurance Corporation (FDIC).
The purchase represents a discount of $16.5 billion U.S., but about $90 billion U.S. in Silicon Valley Bank’s securities and other assets will remain in receivership, said the FDIC.
The acquisition of the loans and deposits by First-Citizens Bank comes after the FDIC transferred all of Silicon Valley Bank’s deposits and assets into a bridge bank earlier this month in an effort to protect depositors of the failed lender.
First-Citizens Bank and the FDIC also entered into a loss-share transaction that will see the FDIC absorb part of the loss on commercial loans purchased from the bridge bank.
The regulator added that the estimated cost of Silicon Valley Bank’s failure will ultimately be about $20 billion U.S., with the exact cost determined once the receivership period ends.
Regulators closed Silicon Valley Bank and took control of its deposits on March 10 in what was the largest U.S. bank failure since the 2008-09 financial crisis.
The collapse came after the bank’s clientele withdrew billions from their accounts and the value of assets previously viewed as safe, such as U.S. Treasuries, fell sharply.
The bridge bank that was established in the wake of Silicon Valley Bank’s collapse has $167 billion U.S. in total assets and $119 billion U.S. in total deposits, said the FDIC.
First-Citizens Bank’s stock has declined 18% over the last 12 months to trade at $19.65 U.S. per share.
