- First Citizens Bank is the 30th biggest US bank with assets of $109B
- Tech startups will need to look elsewhere for banking services after SVB collapsed
First Citizens BancShares won the FDIC auction to acquire Silicon Valley Bank according to an FDIC press release. Under the deal, BancShares will acquire all loans and deposits of the failed bank.
BancShares is the parent company of First Citizens Bank, the 30th biggest bank in the country with assets of $109 billion. It recently acquired CIT, a commercial lender based in New York.
The unexpected collapse
Silicon Valley Bankannounced it planned to sell $2.25 billion worth of shares on March 9, which led its share prices to plummet. The venture capital world became deeply concerned as the bank had innumerable relationships with VC firms, including more than half of all venture-backed US companies.
This resulted in a deposit run and SVB’s parent company SVB Financial Group filed for bankruptcy protection.
The crypto sector was also hit
Unlike Signature or Silvergate bank, Silicon Valley Bank didn't have fiat on-ramps to exchanges, but Circle and other major crypto companies also banked there. After Circle announced that it held deposits of over $3 billion at SVB, its USDC stablecoin lost its 1:1 peg to the US dollar for a few days.
Taking chances
SVB was the leading institution for venture debt and tech startups in the country, taking chances on young startups that most banks wouldn’t work with and creating a reputation for close-knit relationships with prominent venture brokers. It was established back in 1983 with a tendency to back VC firms, which were an emerging phenomenon back then.
SVB experienced decades of almost uninterrupted growth, even surviving the real estate market crash in the 1990s. It offers up-and-coming tech companies like Cisco banking services. Four decades later, tech startups will need to look elsewhere for banking services.
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