First Citizens Said to Continue Pursuit of Silicon Valley Bank

A Silicon Valley Bank branch in San Francisco, California, US, on Monday, March 13, 2023. The collapse of Silicon Valley Bank has prompted a global reckoning at venture capital and private equity firms, which found themselves suddenly exposed all together to the tech industry's money machine. , Bloomberg

Ed Hammond and Matthew Monks, Bloomberg News

Mar 20, 2023

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(Bloomberg) -- First Citizens BancShares Inc., one of the biggest buyers of failed US lenders, is still hoping to strike a deal for all of Silicon Valley Bank, according to people familiar with the matter. 

The Raleigh, North Carolina-based lender submitted an offer on Sunday to buy all of the failed SVB, the people said. It may also participate in the auctions this week for the two parts of company, said one of the people, who asked to not be identified because the matter isn’t public.

Shares of First Citizens, after falling 33% this year, jumped as much as 13% on Monday. They were up 9.6% to $557.73 at 3:09 p.m. Monday in New York trading, giving the company a market value of $8.1 billion.

The Federal Deposit Insurance Corp., which seized SVB this month and has been trying to unload it for the past two weeks, said Monday it would extend the bidding process through Friday after getting “substantial interest” from multiple potential buyers. The FDIC will allow parties to submit separate offers for Silicon Valley Bridge Bank NA and its Silicon Valley Private Bank subsidiary, the regulator said.

There’s no certainty First Citizens or another bidder will reach a deal.

“It is First Citizens Bank’s policy not to comment on market rumors or speculation,” a representative for the bank said in a statement. “First Citizens has a 125-year history of being a strong and stable bank, with a laser focus on doing what is best for our customers, employees and shareholders.”

First Citizens previously submitted a bid for SVB immediately after it collapsed and was active in the data room the FDIC set up last weekend for another sale process, people familiar with the matter have said.

Its consistent interest has stumped some observers, who question whether First Citizens has the wherewithal to take on the second-largest FDIC-assisted bank failure in US history. First Citizens was the 30th largest commercial bank in the US by assets at the end of 2022, according to Federal Reserve data.

But the bank has experience buying broken rivals. First Citizens Chief Executive Officer Frank Holding Jr., whose grandfather took control of the lender in the 1920s, is something of a connoisseur of deals for failed banks. The firm has acquired more than 20 FDIC-assisted banks since 2009, striking a series of deals after the financial crisis from Washington to Wisconsin to Pennsylvania.

First Citizens also completed the acquisition of CIT Group Inc. last year in a deal valued at more than $2 billion.

Under Holding’s tenure, First Citizens has tried to turn conservative risk management into a mantra, whether that’s maintaining high capital ratios or avoiding the sort of long-dated bonds that helped tank SVB when their value collapsed.

--With assistance from Michael Hytha.

(Updates with share price in third paragraph.)

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