By George Ward
According to the FDIC, the SVB (Silicon Valley Bank) has a total of $72 billion in assets that will be acquired by FCB (First Citizens Bank) at a discounted price of $16.5 billion. A finalized agreement has been made for the remaining assets of SVB.
On Sunday evening, the US FDIC confirmed an agreement with FCB — a bank based in Raleigh, North Carolina, to purchase the loans and deposits of the defunct SVB. The FDIC further state that depositors of SVB will become customers of FCB.
First Citizens will take over all deposits, while the FDIC will continue to insure them.
More Details About The Acquisition
As of March 10, SVB had assets worth approximately $167 billion, with deposits amounting to $119 billion. The FDIC has confirmed that the deal includes purchasing approximately $72 billion of the financial institution’s assets at a discount of $16.5 billion.
The remaining assets and securities worth about $90 billion will remain under the receivership of the FDIC, awaiting further disposition. In addition, the FDIC has procured equity appreciation (EA) rights in the common stock from First Citizens Bank’s parent company.
This acquisition could be valued at up to $500 million, depending on market circumstances. Initial estimates by the FDIC revealed that the failure of SVB caused a loss of around $20 billion to its deposit insurance fund.
A Ray Of Hope
During the tumultuous period after the bank’s collapse, many established financial institutions, such as First Republic, Citi, and the Fintech Neobanks, had poached SVB’s customers. Nevertheless, the recent SVB crisis indicates that US authorities are always ready to provide adequate support for banks during a credit crunch.
On Monday, there was a partial recovery of the share price of European lenders. Many analysts attributed this recovery to the announcement of a buyer for SVB’s loans and deposits.
The previous week had been particularly challenging for the sector due to concerns about a systemic bank crisis and a potential credit crunch. Meanwhile, the United States authorities are reportedly considering expanding crisis lending facilities to manage the current liquidity issues affecting its banks.