28 March 2023

Failed Silicon Valley Bank to be largely taken over by First Citizens

North Carolina-based First Citizens Bank doubled its size by taking over $119 billion in loans and deposits of failed Silicon Valley Bank (SVB) from the Federal Deposit Insurance Corporation (FDIC). SVB's collapse is the second largest banking failure in U.S. history and affected many businesses including: Roku, Circle, Roblox, Etsy and BlockFI.

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Founded in 1898 to serve the financial needs of North Carolina farmers, First Citizens has been quietly run by the Holding family for decades. The family-owned bank has pursued a strategy of expanding its operations across the country through strategic acquisitions. For example, the January 2022 acquisition of New York-based CIT Group for $2.2 billion was its largest purchase prior to the SVB takeover.

The FDIC, the government agency that provides insurance on bank deposits up to a certain limit, will retain jurisdiction over about $90 billion in SVB securities and other assets in an effort to reduce losses to depositors and investors. The FDIC estimates that the failure of SVB will result in losses of approximately USD 20 billion.

According to the FDIC, SVB held approximately $167 billion in total assets and $119 billion in total deposits as of March 10. First Citizens purchased approximately $72 billion of the defunct bank's assets at a discount of $16.5 billion and will also be responsible for the operation of SVB's 17 branches. First Citizens' share price rose 43% at Monday's market open. According to First Citizens, the acquisition was the result of a competitive process that took several weeks and involved multiple institutions.