Silicon Valley's 17 former branches will open Monday under the ownership of First Citizens Bank. Photo by Terry Schmitt/UPI | License Photo
March 27 (UPI) -- First Citizens Bank and Trust will buy all deposits and loans of Silicon Valley Bank, federal regulators said late Sunday, after the California tech startup lender was shut down earlier this month.
Regulators shut Silicon Valley down on March 10 when it had about $167 billion in total assets and roughly $119 billion in deposits.
The deal announced late Sunday by the Federal Deposit Insurance Corporation will see First Citizens buy about $72 billion of Silicon Valley's assets at a discount of $16.5 billion, while some $90 billion in securities and its other assets will remain in receivership.
All of Silicon Valley's 17 former branches will open Monday as First Citizens locations with all deposits with the former financial institution to be assumed by their new owner, the FDIC said, adding that they will continue to be insured.
"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," it said in a statement.
The FDIC and First Citizens will share in the losses and potential recoveries on the loans covered in Sunday's loss-share transaction agreement, which is projected to maximize recoveries on the assets by keeping them in the private sector.
"The FDIC estimates that cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion," it said.
The failure of Silicon Valley made it the first FDIC-insured bank to fail in more than two years and ignited fears over the stability of the financial system that only became further inflamed days later when regulators closed Signature Bank, another tech-centered California lender.
New York Community Bancorp bought all deposits and certain loan portfolios of Signature on March 19.
Under the deal, Bancorp bought $38.4 billion of Signature's assets, including loans of $12.9 billion at a discount of $2.7 billion.