On Monday, US Federal Deposit Insurance Corporation (FDIC) reached an agreement with First Citizens Bank that would see the latter take on the loans and deposits of the now-collapsed Silicon Valley Bank. As per the FDIC announcement, the deal includes the acquisition of the failed bank’s assets worth $72 billion for a discount of around $16 billion.
Furthermore, the FDIC will retain over $85 billion in assets and securities to sell on the open market.
In a statement, First Citizens Bank CEO Frank Holding said his company will continue building relationships with its new clients in an effort to position the bank for continued success. He added that First Citizens Bank was committed to supporting the integrity of the banking system.
The First Citizens Bank
Launched 125 years ago, First Citizens Bank is an institution that serves people living in South Carolina and North Carolina. Prior to the acquisition deal, the bank had roughly $100 billion in assets.
The First Citizens CEO said the financial institution would continue to cater to various venture capital clients and tech startups previously served by Silicon Valley Bank.
All seventeen Silicon Valley Bank branches in Massachusetts and California are expected to reopen on Monday under the First Citizens Bank brand. The new owner has urged customers to continue using their current branches until they get notified that they can use others.
The deal is described as a whole bank acquisition, which includes a loss share coverage, meaning FDIC will share in the potential recoveries and losses on loans as stated in the agreement.
Is Banking Crisis Averted?
The latest deal marks the end of the first chapter of a catastrophe that affected several crypto companies, such as Ripple and Circle.
Moreover, many hope this deal will wipe away the uncertainty in the banking sector, which was also brought about by the closure of Signature Bank and Silvergate, both of which were crypto-friendly institutions.
The emergency purchase deal of Credit Suisse in Europe also played a big role in raising fears of a looming banking crisis.
But the troubles in the banking sector, which appear to have negatively impacted the stock prices, had a completely opposite effect on the crypto market, with Bitcoin reaching levels it had not touched since last June.