About $90 billion in securities and other assets will remain under FDIC control, including First Citizens stock which the regulator said has a potential value of up to $500 million.
All told, SVB’s failure is expected to cost the federal Deposit Insurance Fund about $20 billion, the FDIC said. By comparison, the 2008 failure of Washington Mutual — the largest bank failure in U.S. history — was completed at no cost to the insurance fund.
All 17 of the former SVB branches will open Monday under the First Citizens banner, the FDIC said, and depositor accounts will automatically migrate to First Citizens.
First Citizens’ chairman and chief executive, Frank B. Holding Jr., said in a statement that the bank is “looking forward to building relationships” with its new customers and affirmed its “commitment to support the integrity of our nation’s banking system.”
SVB sent shock waves through the U.S. financial system when it imploded March 10, becoming the second-largest bank failure in U.S. history. The lender, which largely catered to start-ups and venture capitalists, was shut down by regulators and taken over by the federal government after depositors scrambled to withdraw their money following a surprise filing that it had sold $21 billion in assets and was selling more of its own stock to shore up its balance sheet.
The disclosure sent SVB stock into free fall and spooked Wall Street, dragging down other bank shares.
The FDIC stepped in by announcing it would guarantee all deposits in the failed bank, and its assets were transferred to a new entity called Silicon Valley Bridge Bank, National Association, which the FDIC marketed for sale.
SVB’s collapse fueled uncertainty for the financial sector as investors scoured the globe for other points of weakness.
New York’s Signature Bank, another tech-focused institution, also went under. Switzerland’s Credit Suisse merged with its larger rival UBS after identifying “material weakness” there.
And First Republic, another West Coast bank with a tech-heavy clientele, has been engaged in talks about a possible sale. It is one of several midsize banks whose stock price has been under pressure amid the crisis.
