First Citizens Bank to acquire collapsed Silicon Valley Bank

North Carolina-based First Citizens will buy Silicon Valley Bank, the tech industry-focused financial institution that collapsed earlier this month, rocking the banking industry and sending shockwaves around the world.

The sale includes the sale of all SVB deposits and loans to First Citizens Bank and Trust Co., the Federal Deposit Insurance Corporation (FDIC) said in a statement late Sunday.

Customers of SVB will automatically become customers of First Citizens, which is headquartered in Raleigh. 17 former SVB branches will open as First Citizens branches Monday.

The collapse of Silicon Valley Bank on March 10 prompted the FDIC and other regulators to act to protect depositors to prevent further financial turmoil.

Based in Santa Clara, California, SVB collapsed after depositors rushed to withdraw their money amid fears about the bank’s health. It was the second largest bank collapse in US history after the 2008 failure of Washington Mutual.

On March 12, New York-based Sign Bank was seized by regulators in the third largest bank failure in the US. Silicon Valley Bank and Signature Bank can access the money.

San Francisco’s mid-sized First Republic Bank, which serves the same clientele as Silicon Valley Bank and appears to be facing a similar crisis, has been dogged by investors who worry it might collapse. That prompted the country’s 11 largest banks to announce a US$30 billion rescue package.

The acquisition of SVB by First Citizens gives the FDIC a stake in the value of US$500 million. Both the FDIC and First Citizens will share the loss and potential loan recovery included in the loss agreement, the FDIC said.

First Citizens Bank was founded in 1898 and says it has total assets of more than $100 billion, with more than 500 branches in 21 states and is also a national bank. It reported a net profit of $243 million in the last quarter.