off-the-wire

FDIC exercises $500 million in First Citizens stock to close SVB deal

Kitco Media
By Reuters
Published:
Updated:
Reuters

March 31 (Reuters) - Regulator Federal Deposit Insurance Corporation (FDIC) exercised its equity appreciation right in First Citizens BancShares Inc (FCNCA.O) stock worth $500 million as part of a deal for the regional lender to buy failed Silicon Valley Bank.

The equity right was exercised on March 28, according to a filing on Friday.

FDIC took over Silicon Valley Bank on March 10 after depositors rushed to pull out their money in a bank run that also brought down Signature Bank (SBNY.O) and wiped out more than half the market value of several other U.S. regional lenders.

U.S. regulators said on Monday they would backstop the deal for First Citizens to buy Silicon Valley Bank, triggering an estimated $20 billion hit to a government-run insurance fund.

First Citizens did not pay cash upfront for the deal. Instead, it said it granted equity appreciation rights in its stock to the FDIC that could be worth up to $500 million, a fraction of what Silicon Valley Bank was worth before it failed.

Reporting by Mehnaz Yasmin in Bengaluru; Editing by Shounak Dasgupta
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.