A buyer has emerged for the assets of the shuddered Silicon Valley Bank. First Citizens Bank has scooped up the deposits, loans, and branch locations of SVB for $16.5 billion. This seems like a steal since the assets were worth around $75 billion before the bank went under. The deal will push First Citizens Bank into the ranks of other top lenders like Morgan Stanley and will make it one of the top 15 banks by portfolio size.
The purchase is good news for SVB depositors, as they now have assurance that their money is safe(er). It is also good news for the banking industry as a whole. First Citizen Bank was one of the banks with more deposits than loans, making it a stable conservator for SVG’s unbalanced balance sheet. But it might not be that great of news for commercial real estate. First Citizen isn’t even in the top twenty banks when it comes to commercial property loans and their residential mortgage portfolio is more than double their CMBS holdings, as per their last earnings report.
Silicon Valley Bank had a relatively light appetite for commercial real estate loans, preferring instead to deploy its money to the tech industry, so the sector hasn’t lost a lender of any significance. But with First Citizen’s current lending strategy, it is clear that this move will not come with a big inflow of lending options, either, which could have been the case if other bidders like Goldman Sacks had ended up buying SVG’s assets.