North Carolina-based First Citizens is buying Silicon Valley Bank, the tech-focused financial institution that collapsed earlier this month.
Posted Date – Mon, 3/27/23 at 11:59pm
New York: North Carolina-based First Citizens is set to buy Silicon Valley Bank, a tech-focused financial institution whose collapse earlier this month shocked the banking industry and sent shockwaves around the world.
The deal could appease investors at a time when confidence in the banks is being shaken, even as the FDIC and other regulators have taken extraordinary steps by guaranteeing depositors at SVB and another failed U.S. bank have access to all their money.
Customers of SVB will automatically become customers of Raleigh-based First Citizens. Seventeen former SVB branches will open Monday as First Citizens branches, the FDIC said.
European shares opened higher on Monday, with Commerzbank up 2.4 percent and BNP Paribas up 1.2 percent.
Investors worry that other banks could also collapse under the pressure of rising interest rates.
Much of the attention on Friday was on Deutsche Bank, whose shares fell 8.5% in Germany, though they were up about 3.6% in early trade on Monday.
Shares and confidence in Swiss bank Credit Suisse fell so much earlier this month that regulators prompted a takeover by rival UBS.
In the US, Santa Clara, Calif.-based SVB collapsed on March 10 as depositors scrambled to withdraw their money amid concerns about the bank’s health.
It was the second-largest bank failure in U.S. history after the collapse of Washington Mutual in 2008.
Two days later, New York-based Signature Bank was seized by regulators after the third-largest U.S. bank collapsed
In both cases, the government agreed to pay deposits, even those over the federally insured limit of $250,000, so depositors were able to withdraw their money.
New York Community Bank agreed a week ago to buy a majority stake in Signature Bank for $2.7 billion, but the search for a buyer for SVB has taken longer.
The sale, announced late Sunday, involves the sale of all of SVB’s deposits and loans to First-Citizens Bank and Trust Co., the FDIC said.
The acquisition values the FDIC’s stake in First Citizens at $500 million. Both the FDIC and First Citizens will share the losses and may recover loans included in the loss-sharing agreement, the FDIC said.
Founded in 1898, First Citizens Bank claims total assets of more than $100 billion, more than 500 branches in 21 states, and a national bank.
The company posted a net profit of $243 million in the previous quarter. It is one of the top 20 US banks and says it is the largest family-controlled bank in the country.
