First Citizens shares soar 50% after the bank buys a large chunk of failed Silicon Valley Bank

On Monday, the U.S. Federal Deposit Insurance Corporation said First Citizens BancShares would buy Silicon Valley Bank’s deposits and loans. This comes just over two weeks after the biggest U.S. banking collapse since the global financial crisis. The shares of First Citizens gained more than 53% during Monday’s Wall Street trading. The deal includes purchasing approximately $72 billion of SVB assets at a discount of $16.5 billion, but around $90 billion in securities and other assets will remain “in receivership for disposition by the FDIC.”

“In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million,” the FDIC said in a release. The deal comes after the regulator transferred all SVB deposits and assets into a new “bridge bank” earlier this month in an effort to protect depositors of the failed lender. “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 statement said Monday. First-Citizens Bank & Trust Company is a subsidiary of First Citizens BancShares. “Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First-Citizens Bank & Trust Company that systems conversions have been completed to allow full-service banking at all of its other branch locations.” First Citizens and the FDIC also entered into a “loss-share transaction” — in which the FDIC absorbs part of the loss on a particular pool of assets — on the commercial loans purchased from the SVB bridge bank.


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