First Citizens stock skyrockets over 49% after acquiring failed Silicon Valley Bank

SVB which was once the top lender of Silicon Valley is the epicentre of the recent banking systems turmoil. The North Carolina-based First Citizens stock price has rallied to as high as 49%.

Pooja Sitaram Jaiswar
Updated27 Mar 2023, 08:21 PM IST
As of Friday, Raleigh, North Carolina-based First Citizens had a market value of $8.4 billion.
As of Friday, Raleigh, North Carolina-based First Citizens had a market value of $8.4 billion.(Bloomberg)

Investors lifted First Citizens Bancshares stock on Monday after its primary subsidiary First Citizens Bank acquired the failed Silicon Valley Bank. SVB which was once the top lender of Silicon Valley is the epicentre of the recent banking systems turmoil. The North Carolina-based First Citizens stock price has rallied to as high as 49%.

At the time of writing, First Citizens traded at $842.64 --- up by $260.09 or 44.6%. But the stock has skyrocketed by at least 49.4% with an intraday high of $870.15 in the early deals. The stock was also near its 52-week high of $885.38.

On the previous day, First Citizens stood at $582.55.

First Citizens Bank & Trust Company on Monday agreed with the Federal Deposit Insurance Corporation (FDIC) to purchase out of FDIC receivership substantially all loans and certain other assets and assume all customer deposits and certain other liabilities of Silicon Valley Bridge Bank, N.A.

In a statement, First Citizens said, the transaction is structured as a whole bank purchase with loss share coverage.

First Citizens was selected to complete this transaction through a competitive bidding process.

Frank B. Holding, Jr., chairman and CEO of First Citizens, said, "First Citizens has a reputation for financial strength, exceptional customer service, and prudent lending that spans 125 years. We have partnered with the FDIC to successfully complete more FDIC-assisted transactions since 2009 than any other bank, and we appreciate the confidence the FDIC has placed in us once again."

The CEO added, "We look forward to building relationships with our new customers and positioning our company for continued success as we affirm our commitment to support the integrity of our nation's banking system."

First Citizens purchased all the loans and deposits of SVB by giving equity rights in its stock --- aggregating to around $500 million in return --- to the government-owned insurer. FDIC was appointed as the receiver when the California department shut down SVB due to its liquidity crisis in mid-March.

Susannah Streeter, head of money and markets at Hargreaves Lansdown told Reuters that there is relief that First Citizen Bank, one of America's largest family-controlled banks, has come to the rescue. Streeter added that a calm of sorts has descended on the banking sector but hopes that this move will see significant stability return may be short-lived.

Notably, this transaction is structured to preserve First Citizens' solid financial position. In its statement, First Citizens said, "the combined company remains resilient and secure with diverse loan portfolio and deposit base."

Also, the acquisition is expected to enable First Citizens to build on its experience with innovation hubs by leveraging Silicon Valley Bank's strength in serving the private equity, venture capital, and technology sectors.

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News in Numbers

Numbers that help you understand news better
$24 M

$13.8 B

₹313 Cr

₹773.44 Cr

34.7 M sqft

250,000

$4.5 B

First Published:27 Mar 2023, 08:21 PM IST
HomeMarketsStock MarketsFirst Citizens stock skyrockets over 49% after acquiring failed Silicon Valley Bank

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