First Citizens BancShares Inc. agreed to buy Silicon Valley Bank
Silicon Valley Bank abruptly became the biggest US lender to fail in more than a decade earlier this month, unraveling in less than 48 hours after outlining a plan to shore up capital. The bank took a huge loss on sales of its securities amid rising interest rates, unnerving investors and depositors who rapidly began pulling their money. On March 9 alone, investors and depositors tried to withdraw about $42 billion.
Then the FDIC extended the bidding process after receiving “substantial interest” from multiple potential acquirers. To simplify the process and expand the pool of bidders, the FDIC allowed parties to submit separate offers for the Silicon Valley Private Bank subsidiary and Silicon Valley Bridge Bank NA — the firm created by the FDIC after SVB went into receivership.
Shares of SVB had plummeted after the Santa Clara, California-based company outlined plans for an equity offering, disclosed it suffered a $1.8 billion loss on the sale of securities and a slowdown in funding at the venture capital-backed firms it serves. The bank was forced to abandon its plan to raise capital as funds including Founders Fund, Coatue Management, Union Square Ventures and Founder Collective began advising their portfolio companies to move money out of SVB.
Its interest in an acquisition has stumped some observers, who questioned whether First Citizens has the wherewithal to take on the second-largest FDIC-assisted bank failure in US history. First Citizens, based in Raleigh, North Carolina, was the 30th largest commercial bank in the US by assets at the end of 2022, according to Federal Reserve data.
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