US bank First Citizens said Monday it has agreed to purchase much of Silicon Valley Bank, whose collapse this month sparked global fears about the sector.
SVB, a key lender to the tech industry since the 1980s, became the biggest US bank to fail since 2008.
Regulators seized it after a sudden run on deposits, creating Silicon Valley Bridge Bank. That entity will be taken over by First Citizens from Monday.
First Citizens said it had agreed to purchase “substantially all loans and certain other assets, and assume all customer deposits and certain other liabilities of Silicon Valley Bridge Bank.”
It said the 17 former branches of SVB will open on Monday as “Silicon Valley Bank, a division of First Citizens Bank.”
The transaction includes the sale of $72 billion in assets at a discount of $16.5 billion, the US Federal Deposit Insurance Corporation (FDIC) said in a statement.
Depositors of SVB will “automatically become depositors of First Citizens Bank,” added the FDIC, which will continue to insure deposits.
All of the entity’s loans and deposits will now be managed by First Citizens, while the FDIC will retain some $90 billion in securities and other assets.
SVB’s collapse sparked a crisis of confidence among the customers of similarly sized US banks, with many withdrawing their money and depositing it into bigger institutions seen as too big for the government to not bail them out in a crisis.
The FDIC said it estimates the cost of SVB’s failure to its Deposit Insurance Fund (DIF) to be approximately $20 billion.
“This has been a remarkable transaction in partnership with the FDIC that should instill confidence in the banking system,” Frank Holding Jr, chief executive of First Citizens, said in a statement according to Bloomberg.
Along with the FDIC, the United States Treasury and Federal Reserve had set out plans to ensure SVB customers would be able to access their deposits, while the Fed introduced a new lending tool for banks in an effort to prevent a repeat of SVB’s quick demise.