FDIC Agrees To $55.5B Deal With First Citizens To Purchase Silicon Valley Bank's Deposits And Loans

Bloomberg reported on Monday that the Federal Deposit Insurance Corporation (FDIC) had stated First Citizens BancShares, the parent company of First Citizens Bank, has agreed to acquire Silicon Valley Bank. Silicon Valley Bank's parent company, SVB Financial Group, filed for bankruptcy protection on March 17.

Although Silicon Valley Bank did not offer fiat on-ramps to exchanges like Silvergate or Signature Bank, several significant crypto companies, including Circle Financial, banked there. After Circle announced that $3.3 billion of its deposits were at Silicon Valley Bank, the value of its USDC stablecoin dropped below its $1 peg for a few days.

Late Sunday in the US, the Federal Deposit Insurance Corp. (FDIC) announced that it had finalized a deal with First Citizens Bank, based in Raleigh, North Carolina, to acquire the loans and deposits of the failed Silicon Valley Bank. Bloomberg had previously reported that a deal was close to completion and could be announced as early as Monday morning in the US. The FDIC statement explained that depositors of Silicon Valley Bridge Bank, the bridge bank created by the FDIC after SVB's failure, would automatically become depositors of First Citizens Bank & Trust Company.

The FDIC confirmed that all deposits assumed by First Citizens Bank & Trust Company would continue to be insured by the FDIC up to the insurance limit. As of March 10, Silicon Valley Bridge Bank reported around $167 billion in assets and nearly $119 billion in deposits. The FDIC stated that the transaction involved acquiring approximately $72 billion of the bank's assets at a $16.5 billion discount. Securities and other assets totaling approximately $90 billion will remain in receivership, pending disposition by the FDIC.

Additionally, the FDIC has acquired equity appreciation rights in First Citizens BancShares common stock, the parent of First Citizens Bank, with potential value of up to $500 million, subject to market conditions. The FDIC estimates that the failure of Silicon Valley Bank cost its Deposit Insurance Fund approximately $20 billion, but the exact cost will be determined once the FDIC concludes the receivership.