Tuesday, February 27, 2024
HomeBusinessFallen SVB to...

Fallen SVB to be assumed by First Citizen Bank

First Citizens BancShares Inc FCNCA.O announced on Monday that it would acquire the deposits and loans of the failed Silicon Valley Bank.

This move marks the closing of one chapter in the crisis of confidence that has ripped through global financial markets.

The Federal Deposit Insurance Corporation (FDIC), which took control of SVB earlier this month, has received equity appreciation rights in First Citizens BancShares stock with a potential value of up to $500 million as part of the deal.

First Citizens, which has completed more FDIC-assisted transactions since 2009 than any other bank, stated that the combined company would be resilient with a diverse loan portfolio and deposit base.

Unit First–Citizens Bank & Trust Company will assume SVB assets of $110 billion, deposits of $56 billion, and loans of $72 billion.

The statement noted that a prudent risk management approach would continue to protect customers and stockholders through all economic cycles and market conditions.

Under the deal, First Citizens will also receive a line of credit from the FDIC for contingent liquidity purposes and will have an agreement with the regulator to share some losses on commercial loans to provide further downside protection against potential credit losses.

Analysts said the move was positive for financial stability and the venture capital industry but only up to a point.

“I think First Citizens Bank’s acquisition of the SVB loan book and deposits does not add much to solve the number one issue that the U.S. banking system is now facing: deposits leaving smaller banks for larger banks or money market funds,” said Redmond Wong, Greater China market strategist at Saxo Markets.

SVB was the largest bank to fail since the 2008 financial crisis when California regulators closed the bank on March 10, sparking massive market disruption and heightening stresses across the banking sector globally.

Based in Santa Clara, it was the 16th biggest lender in the U.S. at the end of last year, with about $209 billion in assets.

The crisis in confidence its collapse triggered also led to the failure of Signature Bank, whose deposits and loans will be taken over by a unit of New York Community Bancorp and forced Switzerland’s second-biggest bank, Credit Suisse CSGN.S, to agree to a rescue by rival UBS UBSG.S.

Worries about the banking sector globally continue to grip investors with shares in European lenders having fallen sharply on Friday, led by Germany’s Deutsche Bank DBKGn.DE, while authorities are also worried about the potential for a credit crunch.

From Monday, SVB’s 17 former branches will begin operating as Silicon Valley Bank, a division of First Citizens Bank, and SVB customers will continue to be able to access their accounts through websites, mobile apps, and branches, First Citizens said.

It added that the deal would accelerate its expansion in California and give it wealth management capabilities in the northeast of the United States.

“We are committed to building on and preserving the strong relationships that legacy SVB’s global fund banking business has with private equity and venture capital firms,” said First Citizens Chief Executive Frank Holding Junior in the statement.

First Citizens has around $109 billion in assets and total deposits of $89.4 billion.

The FDIC said First Citizen’s purchase of about $72 billion of SVB’s assets came at a discount of $16.5 billion. “The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion.

The exact cost will be determined when the FDIC terminates the receivership,” it said. Approximately $90 billion in securities and other assets from SVB will remain in receivership for disposal, the regulator added.

Follow us on Twitter. Send us a secure tip

- A word from our sponsors -

Most Popular

More from Author

Microsoft’s Strategic Acquisition of OpenAI’s Sam Altman Sends Stocks Soaring to Record High

Microsoft, a leading tech giant, has propelled its stocks to unprecedented...

Dating Services Industry to Hit 600 Million Users, $8B in Revenue Next Year

The dating services industry has seen impressive growth over the past...

Citi Launches Securities Lending Access™ In Sweden

LONDON – Citi Securities Services announced Nordnet AB (Nordnet), the leading...

- A word from our sponsors -

Bridging Cultures, Building Futures: The Kiige and Emmanuel Initiative for Immigrant Empowerment in Canada

In the heart of Canada's multicultural landscape, Duncan Kiige and Emmanuel, both celebrated public speakers with immigrant backgrounds, have become symbols of hope and transformation for new immigrants. Their recent conference on career and personal development marked a significant milestone in their mission to empower newcomers with...

UGANDAN FIRST LADY AMAZED BY HAMZ NAKIVUBO STADIUM DEVELOPMENT WORKS BY HAMIS KIGGUNDU.

The NRM government is very proud to see the example of our young people begin to build Uganda by putting up projects such as this one. We congratulate Ham Kiggundu for this excellent jobKAMPALA UGANDA| As sports lovers countdown to 2027 when the Nakivubo-based Hamz Stadium will...

Raila’s search for a post with the AU Commission could be a suitable trapdoor or departure.

In Kenyan politics, Raila Odinga has long been a mystery. His international performance? Even when the African Union designated him, he remained debatable.But he said on Thursday that he would run for the position of Chairperson of the African Union Commission. One diplomat tampered with his first...

Court Finds Jowie Irungu Guilty of Monica Kimani’s Murder

In a landmark ruling, Justice Grace Nzioka declared Jowie Irungu guilty of the murder of Monica Kimani. According to Justice Nzioka, the evidence presented convincingly establishes Jowie's culpability in the crime beyond a reasonable doubt.Highlighting the sequence of events, Justice Nzioka outlined how Jowie, armed with a...

KUPPET Questions Government Directive For Parents To Pay Schools Fees E-Citizen Platform

KUPPET opposes the Government directive for parents to use eCitizen platform to pay school fees calls for clear public participation, legislation and policy framework.KUPPET national officials have opposed the move by Government to force parents to use eCitizen platform to pay school fees saying it will be difficult for...

List of best Audiology Services in Nairobi, Kenya

List of best Audiology Services in Nairobi, Kenya. The word audiology is made up of two roots: Audio and Logy. ‘Audio’ refers to ‘hear’ and ‘logy’ to ‘the study of’. In essence, audiology is the study of hearing - as the inner ear is also required...