Bank / Credit Union

First Citizens Bank to acquire SVB amid turmoil

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March 28, 2023

First Citizens Bank has signed an agreement to purchase Silicon Valley Bank from the Federal Deposit Insurance Corp.

SVB has been in the news cycle given its collapse due to a major run for withdrawals from depositors.

The bank, according to a press release, will purchase all loans and assume customer deposits and other liabilities of SVB. First Citizens will acquire SVB assets of $110 billion and deposits of $56 billion and loans of $72 billion.

Following this announcement, the S&P 500 Banks index rose by 3%. Some analysts have suggested this means that the issue with many banks is being driven more by customer sentiment rather than systematic issues, according to a report by CNBC.

"It was more of a 'sentiment contagion' rather than the true systemic contagion we saw during the global financial crisis. Vanguard economists believe that the damage has been largely contained, thanks to the quick action of federal agencies and other banks," Sara Devereux, global head of the fixed income group at asset management giant Vanguard, told CNBC.

The FDIC will provide a line of credit for contingent liquidity purchases. Customers will not see any changes to their accounts and will be able to access their accounts through website, app or branch.

"First Citizens has a proud history of growing organically and through strategic acquisitions that build our core capabilities in a careful and deliberate manner," Frank B Holding Jr., chairman and CEO of First Citizens, said in the release. "This transaction leverages our solid foundation to add significant scale, geographic diversity, compelling digital capabilities and most importantly, meaningful solutions for customers throughout their lifecycle. Specifically, we are committed to building on and preserving the strong relationships that legacy SVB's Global Fund Banking business has with private equity and venture capital firms. This transaction also will accelerate our expansion in California and introduce wealth capabilities in the Northeast. SVB's Private Wealth business is a natural fit for our high-touch and sophisticated level of high-net-worth customer service and approach."