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A deal has been finalized for what’s left of Silicon Valley Bank.
The Federal Deposit Insurance Corp. (FDIC) announced late Sunday U.S. time that it had finalized a deal with Raleigh, N.C.-based First Citizens Bank to acquire the deposits and loans of the failed Silicon Valley Bank. Bloomberg had initially reported that a deal was nearing completion and could be announced as early as Monday morning U.S. time.
In a statement, the FDIC said that all depositors of Silicon Valley Bridge Bank, the bridge bank set up by the FDIC after SVB’s failure, will automatically become depositors of First Citizens Bank & Trust Company. All deposits assumed by First Citizens Bank & Trust Company will continue to be insured by the FDIC up to the insurance limit.
As of March 10, Silicon Valley Bridge Bank reported roughly $167 billion in assets and nearly $119 billion in deposits. The FDIC says the transaction involved purchasing around $72 billion of the bank's assets at a $16.5 billion discount. About $90 billion in securities and other assets will stay in the receivership, awaiting disposition by the FDIC.
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The FDIC also says it has acquired equity appreciation rights in First Citizens BancShares common stock, the parent of First Citizens Bank, which is potentially worth up to $500 million pending market conditions.
Initial estimates from the FDIC say that Silicon Valley Bank’s failure cost its Deposit Insurance Fund around $20 billion. The precise cost will be established once the FDIC concludes the receivership.