The US Federal Deposit Insurance Corporation said on Monday that the First Citizens Bank and Trust Co will buy the now collapsed Silicon Valley Bank’s deposits and loans. The development comes just two weeks after the biggest US banking collapse since Lehman Brothers.

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“The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023,” the FDIC said in an statement.

According to the deal, First Citizens Bank will purchase approximately $72 billion of the SVB assets at a discount of $16.5 billion. However, around $90 billion in securities and other assets will remain in receivership for disposition by the FDIC.

Also Read: SVB, Signature – a look at largest bank failures in US history

As per the release by the FDIC, the agency has received equity appreciation rights in First Citizens BancShares, Inc, Raleigh, North Carolina, common stock with a potential value of up to $500 million.

The First Citizens Bank and the FDIC have also entered into a loss-share transaction. “The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers,” the agency said.

The SVB Financial Group (SVB), which does business as Silicon Valley Bank (SVB), was shut down by the US regulators on March 10 and took control of its deposits after the high-tech lender’s share price nosedived.

Also Read: Customers Bancorp weighs making an offer for Silicon Valley Bank

First Published:Mar 27, 2023 12:57 PM IST