First Citizens Bank, based in North Carolina, will buy a large portion of Silicon Valley Bank, A technology-focused entity whose bankruptcy rocked the banking sector this month.
The deal could reassure investors at a time of mistrust in banksthough the FDIC and other regulatory agencies have already taken extraordinary steps to prevent a broader banking crisis by ensuring that all depositors of SVB and another failed bank in the US have access to all of your money.
SVB clients will automatically become clients of Raleigh’s first citizens. The FDIC said the 17 former SVB offices will open Monday as First Citizens offices.
European stocks opened higher on Monday, with German lender Commerzbank AG up 2.4% and French lender BNP Paribas up 1.2%.
Investors fear that other banks may succumb to pressure from higher interest rates. Much of the attention on Friday focused on Deutsche Bank, whose shares fell 8.5% in Germany, although it regained 3.6% in early trading Monday. Shares and confidence in Swiss bank Credit Suisse have fallen so much this month that regulators have negotiated a takeover by rival UBS.
In the United States, SVB Bank in Santa Clara, California, collapsed on March 10 after depositors rushed to withdraw funds amid concerns about the health of the bank. It was the second largest bank failure in US history after Washington Mutual in 2008. Two days later, New York-based Signature Bank was seized by regulatory agencies, the third largest bank failure in the United States.
In both cases, the government agreed to cover deposits, including deposits over the federally insured limit of $250,000.so that depositors can access their funds.
New York Community Bank agreed to buy a significant portion of Signature Bank in a $2.7 billion deal a week ago, but finding a buyer for SVB took longer.
The FDIC said the sale, announced Saturday night, included the sale of all SVB deposits and loans to First Citizens Bank and Trust Co.
First Citizens Bank was founded in 1989 and claims to have more than $100 billion in total assets, with more than 500 offices in 21 states and a national bank. In the last quarter, it made a net profit of $243 million. It is one of the 20 largest banks in the United States and claims to be the largest family-controlled bank in the country.