U.S. regulators announced on Monday that they would support the acquisition of the defunct Silicon Valley Bank by regional lender First Citizens BancShares (FCNCA), which would have caused a $20 billion hit to a government-run insurance fund.
In accordance with the latest information from the FDIC, First Citizens would receive SVB (SIVB) assets of $110 billion, deposits worth $56 billion, and loans worth $72 billion. Furthermore, the bank and the FDIC have a contract that will shield the bank from potential losses on the SVB commercial loans it is purchasing.
First Citizens’ purchase of SVB results in the FDIC receiving $500 million worth of shares in the latter. According to the FDIC, First Citizens and the FDIC will split losses and any recoveries on loans covered by a loss-share agreement.
First-Citizens Bank and Trust Co. would receive the sale of all of SVB’s deposits and loans, the FDIC said in a statement late Sunday. Clients of SVB will instantly become customers of Raleigh-based First Citizens. On Monday, the seventeen former SVB locations will reopen as First Citizens locations.
After Washington Mutual’s failure in 2008, SVB was the second-largest bank failure in American history. The third-largest bank failure in American history, regulators seized New York-based Signature Bank on March 12.
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