The US FDIC said it will retain roughly $90bn in SVB assets and expects to take a hit of roughly $20bn from the collapse.
Silicon Valley Bank (SVB) has been bought by another bank, following its recent collapse and takeover by US authorities.
The technology-focused bank went into freefall earlier this month after its stock price plummeted and investors moved to withdraw their deposits. This eventually led to the bank’s closure by US regulators.
Now, the Federal Deposit Insurance Corporation (FDIC) has confirmed that First Citizens Bank has agreed to purchase the troubled bank, along with all of its deposits and loans.
The FDIC said 17 former branches of SVB will open today (27 March) as branches of First Citizens. The transaction included the purchase of roughly $72bn billion of SVB assets at a discount of $16.5bn.
In a statement, the FDIC said it will retain receivership of roughly $90bn of SVB’s securities and other assets. The organisation also expects the final cost to its Deposit Insurance Fund to be around $20bn.
First Citizens has revealed plans to integrate the two banks over time and offer its own services to SVB account holders.
“We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation’s banking system,” said First Citizens CEO Frank B. Holding Jr.
Worldwide banking concerns
Silicon Valley Bank had invested hundreds of millions into Irish companies since it first established a presence here in 2012, with plans to invest more into technology and life sciences businesses here in the coming years.
The initial collapse directly impacted some Irish start-ups. Ian Browne, MD of the NDRC accelerator, revealed that some companies in its portfolio were impacted, along with some Dogpatch Labs supported companies.
Earlier this month, the UK branch of Silicon Valley Bank was sold to HSBC, through a private deal that was facilitated by the government and the Bank of England. This deal was done in consultation with the UK Treasury, but no taxpayer money was involved in the transaction.
The collapse of SVB and other banks has raised concerns about a looming banking crisis. At around the time of SVB’s collapse, US authorities took possession of Signature Bank, a crypto-focused institution, in a similar attempt to protect deposits.
This marked the third major bank that collapsed in roughly a week, with Silvergate Bank recently announcing its liquidation plans. Since then, Credit Suisse entered a period of uncertainty and was sold to UBS.
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