First Citizens buy la Silicon Valley Bank (SVB), the California lender whose collapse sent shockwaves throughout the financial sector. The US federal agency – the Federal Deposit Insurance Corporation – made the announcement late in the evening of Sunday 26 March, which took control of Svb on 10 March, after a run on deposits had made it insolvent, pushing the US regulators to take immediate action. The Fdic has been looking for a buyer for the bank ever since. As the US market reopens today, the 17 former branches of the bridge bank reopen with the First-Citizens "signs". Its depositors will automatically become customers of First Citizens.
The details of the acquisition of Svb
The move by the Federal Deposit Insurance Corporation aims to ease tensions in US markets. L'agreement for the bank, which has become Silicon Valley Bridge Bank (to protect depositors, the FDIC has transferred all deposits and assets to a new "bridge bank"), envisages the purchase of approximately $72 billion of assets, with one discount $16,5 billion (SVB had $167 billion in total assets and about $119 billion in total deposits as of March 10). An additional $90 billion in securities and other assets remain in the FDIC's hands as collateral for the entire operation. The banking regulator will receive up to $500 million in First Citizens stock valuation rights.
Also, Fdic. estimated that the cost of bankruptcy of the bank for the government's deposit insurance fund will be approximately $20 billion. "Prudent risk management will continue to protect clients and shareholders through all possible economic cycles and different market conditions," the regulator commented.
The collapse of SVB shook the global financial sector
After failure of Silicon Valley Bank stocks of banks around the world suffered large losses in the financial markets because investors feared that other banks would then fail as a result (as in the days of Lehman Brothers). Which partially happened: after Svb, the US also went bankrupt Signature Bank and Credit Suisse it came very close. The banking earthquake has also cast doubt on the German's financial stability Deutsche Bank.
On March 19, New York Community Bancorp acquired Signature Bank a week after the FDIC seized its assets. The deal included approximately $38 billion of assets, including $12,9 billion of loans, purchased at a $2,7 billion discount.
During the same period, the largest Swiss bank, theubs, he agreed to buy the small and beleaguered rival Credit Suisse for about 3,2 billion dollars, in a lightning deal organized by the Swiss government. With Silicon Valley Bank spooking markets, investors quickly lost faith in Credit Suisse, which had been plagued by scandals and mismanagement for years.
Banking regulators around the world have moved quickly to boost trust in the system. The Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said they would work to make money more readily available. funding in dollars. The Fed has also set up a program of emergency loans to provide further support to banks.
Who is First Citizens who bought Svb
First Citizens, headquartered in Raleigh, North Carolina, is a so-called regional bank. It has grown significantly in recent years, reportedly having over $100 billion in assets and more than 500 branches in 22 states. With this acquisition, First Citizens Bank expands significantly, becoming the 36th largest bank in the United States.
