In a landmark deal, First Citizens BancShares Inc. has agreed to acquire Silicon Valley Bank at a discounted price of $16.5 billion for approximately $72 billion in assets. This move comes after the bank was taken over by authorities due to a run on the lender. As part of the deal, the Federal institution will receive equity appreciation rights in First Citizens worth up to $500 million, and around $90 billion in securities and other assets will remain in the receivership for the FDIC to dispose of.
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Although the Deposit Insurance Fund is expected to bear a loss of around $20 billion due to the failure of Silicon Valley Bank, the exact amount will only be known once the receivership is over. According to Frank Holding Jr., CEO of First Citizens, this collaboration with the FDIC is aimed at instilling confidence in the banking system.
This acquisition represents the second-largest bank failure in US history to receive FDIC assistance. First Citizens has been actively acquiring rival banks since the financial crisis, with over 20 transactions since 2009. Last year, the bank finalized the acquisition of CIT Group Inc. for $2 billion. As of the end of 2022, it was the 30th largest commercial bank in the US by assets.
This deal is expected to have a positive impact on both banks and their customers, as it will strengthen First Citizens' position as a major player in the banking industry. The acquisition will also allow Silicon Valley Bank to continue providing its services to customers, ensuring a smooth transition.
