The media reports that First Citizens Bank plans to acquire a Silicon Valley Bank.
Over the past 14 years, First Citizens Bank has acquired 20 bankrupt financial institutions. The bank has submitted an offer to purchase SVB. Also, a financial institution can participate in auctions for the sale of the failed bank and its subsidiary Private Bank, which will take place this week. This information was published by the media concerning anonymous sources.
Representatives of First Citizens Bank, in response to a request for confirmation of intentions to purchase SVB, stated that the policy of the financial institution provides for a refusal to comment on market rumors and various speculations. They also noted that the bank has a 125-year history of being a strong and stable lender, which pays special attention to providing the best to customers, employees, and shareholders.
There is no certainty that the bank or any other participant in the upcoming auction will conclude a deal with the Federal Deposit Insurance Corporation (FDIC) to acquire SVB.
Many experts perceive the intention of First Citizens Bank with a degree of doubt. They say that this financial institution, which ranks 30th in terms of assets among US banks, may not be able to cope with SVB. The collapse of the Silicon Valley lender was the second largest FDIC-assisted bankruptcy in the history of the US banking sector. But First Citizens Bank has many years of experience acquiring failed financial institutions.
Last week, the bank approached SVB with an acquisition offer and was refused. The lender has not abandoned its intention and will try to implement it within the framework of the auction.
Private equity and venture capital (VC) companies also tried to make deals to buy SVB in the days after its collapse. In this case, the FDIC adheres to the goal that the transition to a new owner should be smooth. The Federal Corporation also insists that the buyer complies with regulatory requirements. On Friday, March 17, the FDIC announced its readiness to soften the terms of the deal through negotiations on the division of losses.
Previously, the regulator ruled out the possibility of distributing losses. The position changed after the first auction for the sale of SVB did not bring results. More than a decade ago, the regulator always offered loss-sharing agreements, but after the 2008 financial crisis, it was negatively criticized for this tactic.