First Citizens considers bid to acquire Silicon Valley Bank, report says

First Citizens is considering an offer for buying Silicon Valley Bank (SVB), while at least one other potential buyer is also showing interest in acquiring the failed lender. The Raleigh, North Carolina-based bank is reportedly one of several prospective buyers with access to the data room as part of the auction process for the failed bank, according to Bloomberg.

The Federal Deposit Insurance Corp (FDIC) has reportedly requested that interested banks submit their bids for SVB and Signature Bank by March 17. The FDIC had taken over both Silicon Valley Bank and Signature Bank last Friday and Sunday, respectively, after the collapses of the two mid-sized lenders caused concern over a possible contagion in the global financial markets.

This latest attempt by the FDIC to sell SVB follows a previous failed auction just a week ago. The agency has hired investment bank Piper Sandler Cos to oversee the new auction, according to sources cited by Reuters.

The potential acquisition of SVB could be a strategic move for First Citizens, as the bank seeks to expand its presence in the technology hub of Silicon Valley. Meanwhile, the competition for the collapsed lender highlights the growing interest in mid-sized banks, as larger financial institutions look to diversify their portfolios and gain a competitive edge.

It remains to be seen which bidder will ultimately acquire SVB, and what impact this acquisition will have on the broader financial industry.

Also read: 186 US banks at risk of failure similar to Silicon Valley Bank, says research; here's why

Silicon Valley Bank Crash

In the wake of the pandemic, Silicon Valley Bank had been investing heavily in assets typically considered "safe," such as US Treasuries and government-backed mortgage bonds. 

However, when interest rates rose rapidly in 2020, the fixed interest payments on these assets failed to keep pace with the rate hike. As a result, the bank was left with over $17 billion in potential losses on these investments by the end of the year.

Compounding these losses, the bank also faced a significant challenge last week when it was hit with an overwhelming $42 billion in deposit withdrawal requests. Unable to raise sufficient cash to cover the outflows, the bank was forced to seek assistance from regulators and ultimately shut down.

(With Agency inputs)

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