First Citizens has agreed to acquire a $72 billion chunk of Silicon Valley Bridge Bank, formerly known as Silicon Valley Bank which was acquired by the FDIC. SVB was a source of funding to startups until it collapsed sending shockwaves through the financial sector.
The SVB collapse shook the banking industry, especially regional banks. It prompted the FDIC to move all SVB deposits into a new “bridge bank” to protect depositors and gave bank depositors access to all their money.
The FDIC said that seventeen of the SVB's former branches would open as First Citizens Bank.
It took weeks to complete a deal with assets almost certainly devaluing a little bit more with each passing day. The FDIC previously had two unsuccessful auction processes for Silicon Valley Bridge Bank.
This deal with First Citizens includes purchase deposits and loans, worth about $72 billion, at a discount of $16.5 billion.
Frank B. Holding, Jr., chairman, and CEO of First Citizens said in a statement “First Citizens has a proud history of growing organically and through strategic acquisitions that build our core capabilities in a careful and deliberate manner,” He said they are specifically committed to building on and preserving the legacy SVB’s Global Fund Banking business has with private equity and venture capital firms.
He said that acquiring Silicon Valley Bridge Bank will strengthen First Bank's ability to serve companies in the private equity, venture capital, and technology sectors.
The failure of Silicon Valley Bank exposed many of the banking sector’s vulnerabilities and put it under the watchful eye of the Fed.
Now, its collapse has introduced another major chapter in finance. This has led many to call for change in how lenders value their assets in financial statements.
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