On March 27th, 2023, First Citizens Bank announced its acquisition of Silicon Valley Bank (SVB) after the bank’s failure. The deal includes First Citizens Bank taking on the deposits and loans of the failed SVB for a discount of $16.5 billion, with the FDIC keeping another $90 billion in securities and assets to sell on the open market in a process known as “disposition” [1]. This deal allows First Citizens Bank to continue serving various startup-centric and venture capital clients, reaffirming its commitment to support the integrity of the nation’s banking system [2].
This acquisition has significant implications for the banking industry as it represents the largest U.S. banking collapse since the global financial crisis. SVB’s clientele had withdrawn billions from their accounts, leaving the bank floundering as it attempted to raise $2.25 billion to meet clients’ withdrawal needs and fund new lending [3]. This event also caused shockwaves through global banks and was cited as one of the catalysts for Swiss giant Credit Suisse’s eventual downfall and emergency rescue by domestic rival UBS [1].
The deal between First Citizens Bank and SVB is structured as a whole bank purchase with loss share coverage, which means that the FDIC will share in the losses and potential recoveries on loans covered by the agreement [1]. All 17 of the former SVB branches in California and Massachusetts reopened under the First Citizens brand on March 27th, with customers urged to use their current branch until they receive notice that they can use any of the new owner’s locations [2].
This acquisition is a significant win for First Citizens Bank, a 125-year-old institution with a focus on North Carolina and South Carolina. Prior to the deal, the bank had around $100 billion in total assets [2]. First Citizens Chairman and CEO, Frank B. Holding, stated that the bank is committed to building on and preserving the strong relationships that legacy SVB’s Global Fund Banking business has with private equity and venture capital firms [1].
In conclusion, First Citizens Bank’s acquisition of Silicon Valley Bank has significant implications for the banking industry as it marks the largest U.S. banking collapse since the global financial crisis. This acquisition allows First Citizens Bank to continue serving various startup-centric and venture capital clients, reaffirming its commitment to support the integrity of the nation’s banking system. The deal is structured as a whole bank purchase with loss share coverage, with the FDIC sharing in the losses and potential recoveries on loans covered by the agreement. All former SVB branches in California and Massachusetts reopened under the First Citizens brand on March 27th.
