First Citizens BancShares, based in Raleigh, North Carolina, has acquired the assets and loans of Silicon Valley Bank (SVB), which was seized by US regulators earlier this month after a run on the bank. The failure of SVB, one of the largest bank failures in the US since the financial crisis of 2008, triggered fears about the stability of other lenders, leading to sharp falls in bank shares around the world.
Under the takeover deal announced by the US Federal Deposit Insurance Corporation (FDIC), all 17 former SVB branches will open under the First Citizens brand on Monday. First Citizens has been one of the largest buyers of troubled banks in recent years and claims to be America’s biggest family-controlled bank. The acquisition of around $72bn of SVB’s assets and loans at a discount of $16.5bn makes it one of its largest purchases to date.
SVB customers are advised to continue using their current branch until they receive notice from First Citizens Bank that their account has been fully moved across. The FDIC will still hold about $90bn of SVB’s assets, and the cost of SVB’s failure to its deposit insurance fund is estimated to be around $20bn.
The collapse of SVB and the subsequent failure of another US bank, Signature Bank, have led to concerns about the banking sector, with markets remaining nervous. Shares in Germany’s Deutsche Bank fell by 14% at one point on Friday, before recovering some ground. On Monday, bank shares opened higher but remain subject to volatility.
The current worry among financial markets is that there may be other problems in the banking sector that have yet to emerge. Rising interest rates have hit the value of investments that banks keep some of their money in and contributed to the bank failures in the US. However, central banks around the world have emphasized that the banking system is safe and well-capitalized.
In conclusion, the acquisition of SVB’s assets and loans by First Citizens BancShares represents a significant development in the banking sector, given the recent failures of several major US banks. While markets remain nervous, there is a need for vigilance and careful monitoring of the situation to ensure financial stability.