First Citizens Bank is the American bank that will buy the deposits and loans of Silicon Valley Bank (SVB), the largest American bank to close its doors on March 10 since the collapse of Lehman Brothers in 2008. This was announced by US federal authority FDIC (Federal Depost Insurance Corporation), the US deposit guarantee authority.
“The 17 branches of Silicon Valley Bridge Bank, National Association, will open as branches of First–Citizens Bank & Trust Company effective Monday, March 27, 2023 (today),” the FDIC said in a statement. the control of SVB after the collapse of the institute. .
“All deposits taken over by First Citizens Bank & Trust Company will continue to be insured by the FDIC up to the maximum guarantee limit,” the US federal agency announced again.
The deal will see First Citizens Bank buy approximately $72 billion worth of SVB assets at a $16.5 billion discount. At the same time, approximately $90 billion of securities and other assets will remain “in receivership per order of the FDIC.” In addition, the press release issued by the US Federal Deposit Guarantee Authority continues, “the FDIC has received revaluation rights in First Citizens BancShares, (bank of Raleigh, North Carolina)”, to be precise in “common shares for a potential value of up to 500 million”.
The purchase of SVB’s deposits and loans comes after the decision of the US federal authorities FDIC, Fed and Treasury department which, following the Bank Run that hit the Californian start-up bank, intervened, sanctioning the institution’s bankruptcy and then transferring the deposits and assets to a new “bridge bank”.
Just the series of shock announcements arrived first by the Silicon Valley Bank itself and subsequently by the authorities who took control of it – after that, in the space of a single day, depositors had withdrawn a good 42 billion dollars – have unleashed in the United States , but also on a global level, the panic on the markets, bringing back the memory of the collapse of Lehman Brothers on finance made in the USA. It is to the crash of the Californian institute that the fear of a contagion effect is traced which resulted in the drama of Credit Suisse, a Swiss bank saved by the skin of the hand by the Swiss government and the Swiss National Bank (SNB), through the forced marriage agreement with rival UBS. SVB can also be identified as the starting point of the banking crisis which, last Friday, also triggered the alert on the fate of Deutsche Bank.
SVB was in fact the largest American bank to close its doors since the crash of Washington Mutual which took place in 2008, the year in which the end of broadcasting was also decreed for the former banking giant Lehman Brothers.
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Just the crash of SVB, combined with the bankruptcy of the crypto bank Signature Bank, which arrived a few days after the liquidation of Silvergate, triggered a crash in the stock markets all over the world through a wave of sells that swept away bank stocks, primarily those regional banks, or even small-medium sized ones, made in the USA.
In particular, First Republic stock was attacked by record sell-offs after the bank was identified as the next domino to fall.
In today’s announcement, the federal deposit insurance agency FDIC also said the cost of SVB’s bankruptcy to its Deposit Insurance Fund (DIF) will be approximately $20 billion. The definitive cost will be communicated at the end of the controlled administration process started on the bank. The FDIC also confirmed that, on March 10, the date of the Silicon Valley Bank crash, the institution held total assets worth $167 billion, against total deposits of $119 billion. approximately billions of dollars.
“Customers of Silicon Valley Bridge Bank, National Association – reads the note from the authority – will have to continue to refer to the current branches until First–Citizens Bank & Trust Company communicates that the conversion of the systems has been completed, allowing the provision of all services in its other branches”.
First Citizens is an American bank that offers general banking services through more than 550 branches and offices in 23 US states. The bank will acquire $110 billion of assets from SVB, together with $56 billion of deposits and $72 billion of loans.
First Citizens also entered into an agreement with the FDIC that will protect it from potential losses from Silicon Valley Bank’s commercial loans.