According to Bloomberg, First Citizens BancShares, the parent company of First Citizens Bank, has agreed to purchase Silicon Valley Bank, citing a statement from the Federal Deposit Insurance Corporation (FDIC). Silicon Valley Bank’s parent company, SVB Financial Group, declared bankruptcy on March 17.
While Silicon Valley Bank does not give fiat on-ramps to exchanges like Silvergate or Signature Bank, it did bank a number of significant crypto firms such as Circle Financial. Circle’s USDC stablecoin briefly plummeted below $1 when the business reported that $3.3 billion of its deposits were held at Silicon Valley Bank.
Brian Brooks, the former acting head of the Office of the Comptroller of the Currency (OCC), stated in a recent interview that the United States Government is actively trying to choke off crypto’s access to the banking sector.
Meanwhile, some crypto stakeholders have said that this banking crisis will strengthen crypto in the long term.
First Citizens Agree $55.5B Loans Agreement With FDIC
The Federal Deposit Insurance Corporation (FDIC) announced late Sunday that it had closed a deal with Raleigh, N.C.-based First Citizens Bank to buy the bankrupt Silicon Valley Bank’s assets and liabilities.
The FDIC stated in a statement that all depositors of Silicon Valley Bridge Bank, the bridge bank established by the FDIC following the demise of SVB, will immediately become depositors of First Citizens Bank & Trust Company. The FDIC will continue to cover all deposits assumed by First Citizens Bank & Trust Corporation up to the insurance limit.
Silicon Valley Bridge Bank has around $167 billion in assets and nearly $119 billion in deposits as of March 10. According to the FDIC, the transaction entailed the purchase of around $72 billion in bank assets at a $16.5 billion discount. Around $90 billion in securities and other assets will remain in receivership pending disposal by the FDIC.
According to the FDIC, it has also purchased equity appreciation rights in First Citizens BancShares common stock, the parent company of First Citizens Bank, which may be worth up to $500 million depending on market circumstances.
According to preliminary FDIC estimates, Silicon Valley Bank’s bankruptcy cost the Deposit Insurance Fund roughly $20 billion. The exact cost will be determined once the FDIC completes the receivership