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First Citizens Bank will acquire the Silicon Valley Bank and get control of $56 billion in deposits and $72 billion in loans.

This week the US’s Federal Deposit Insurance Corporation (FDIC) announced that First-Citizens Bank and Trust Co. will buy Silicon Valley Bank, the tech industry-focused financial institution that collapsed on March 10.

The sale involves the sale of all deposits and loans of SVB to First-Citizens, the FDIC said in a statement late Sunday. Customers of SVB will automatically become customers of First Citizens, which is headquartered in Raleigh, North Carolina. The 17 former branches of SVB will open as First Citizens branches this week.

Assets to be acquired at a discount

The deal includes the purchase of about $72 billion assets of Silicon Valley Bank at a discount of $16.5 billion. About $90 billion in securities and other SVB assets will remain “in receivership of disposition” by the FDIC.

Earlier this month, federal regulators were forced to step in and take over the Santa Clara, California-based Silicon Valley Bank to ensure that all deposits at the bank, including those not covered by the FDIC, are safe after the bank suddenly collapsed following a bank run. The FDIC estimates it will need to allocate $20 billion (€18.5 billion) to make the SVB depositors whole.

With total assets worth $209 billion, SVB’s sudden collapse was the second-biggest bank failure in U.S. history, raising fears of a broader contagion across the banking sector.

Frank B. Holding, Jr., chairman and CEO of First Citizens, said in a statement: “we are committed to building on and preserving the strong relationships that legacy SVB’s Global Fund Banking business has with private equity and venture capital firms.

“This transaction also will accelerate our expansion in California and introduce wealth capabilities in the Northeast. SVB’s Private Wealth business is a natural fit for our high-touch and sophisticated level of high-net-worth customer service and approach”, he added.