The Federal Deposit Insurance Corporation (Fdic) has entered into an agreement to purchase and assume all deposits and loans of the bankrupt Silicon Valley Bridge Bank, National Association, from First–Citizens Bank & Trust Company, Raleigh, North Carolina. “The former 17 branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023. Clients of Silicon Valley Bridge Bank, National Association, are expected to continue using their current branch until will not receive notice from First–Citizens Bank & Trust Company that system conversions have been completed to enable full banking services at all other branches.” The Federal Deposit Insurance Corporation reports this in a statement.
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Depositors of Silicon Valley Bridge Bank, National Association will automatically become depositors of First–Citizens Bank & Trust Company. All deposits made by First–Citizens Bank & Trust Company will continue to be insured by the FDIC up to the limit of insurance. As of March 10, 2023, Silicon Valley Bridge Bank, National Association, had approximately $167 billion in total assets and approximately $119 billion in total deposits.
Today’s transaction included the approximately $72 billion purchase of Silicon Valley Bridge Bank, a National Association asset, at a $16.5 billion discount. The Silicon Valley Bridge Bank – a statement explains – was created by Fdic following the closure of the Silicon Valley Bank by the California Department of Financial Protection and Innovation. About $90 billion in securities and other assets will remain in administration under the FDIC disposition. In addition, the Fdic received capital appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million.
The FDIC and First-Citizens Bank & Trust Company have entered into a loss-sharing transaction on commercial loans purchased by the former Silicon Valley Bridge Bank, National Association. The Fdic as liquidator and First–Citizens Bank & Trust Company will share losses and potential recoveries on loans covered by the loss sharing agreement. The loss-sharing transaction is expected to maximize recoveries on assets by keeping them in the private sector. The transaction is also expected to minimize disruption for loan customers. In addition, First–Citizens Bank & Trust Company will assume all qualified financial agreements relating to the loan. The FDIC estimates the cost of Silicon Valley Bank’s bankruptcy to its Deposit Insurance Fund (DIF) at about $20 billion.
