Connect with us

Hi, what are you looking for?

Business

First Citizens Bank to buy Silicon Valley Bank deposits and loans

First Citizens Bank & Trust Co will buy Silicon Valley Bank’s deposits and loans, the U.S. Federal Deposit Insurance Corporation said Monday, just over two weeks after the biggest U.S. banking collapse since Lehman Brothers.

The deal includes the purchase of approximately $72 billion of SVB assets at a discount of $16.5 billion, but around $90 billion in securities and other assets will remain “in receivership for disposition by the FDIC.”

“In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million,” the FDIC said in a release.

It comes after the regulator transferred all SVB deposits and assets into a new “bridge bank” earlier this month in an effort to protect depositors of the failed lender.

“The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023,” the FDIC statement said Monday.

“Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full–service banking at all of its other branch locations.”

Silicon Valley Bank’s collapse sent shockwaves through global banks.Lauren Justice / Bloomberg via Getty Images

First Citizens Bank and the FDIC also entered into a “loss-share transaction” — in which the FDIC absorbs part of the loss on a particular pool of assets — on the commercial loans purchased from the SVB bridge bank.

“The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers,” the FDIC explained.

The regulator added that the estimated cost of SVB’s failure to its Deposit Insurance Fund will be around $20 billion, with the exact cost determined once the receivership is terminated.

Regulators closed down SVB, a big name in the tech and venture capital sector, and took control of its deposits on March 10 in what was the largest U.S. bank failure since the global financial crisis.

The collapse came after the bank’s clientele withdrew billions from their accounts and the value of assets previously viewed as safe — such as U.S. Treasury bills and government-backed mortgage securities — dropped dramatically in the face of the Federal Reserve’s aggressive interest rate hikes.

This left the bank floundering as it attempted to raise $2.25 billion to meet clients’ withdrawal needs and fund new lending.

As of March 10, the SVB bridge bank had around $167 billion in total assets and approximately $119 billion in total deposits, the FDIC confirmed.

SVB’s collapse sent shockwaves through global banks and was cited as one of the catalysts for Swiss giant Credit Suisse’s eventual downfall and emergency rescue by domestic rival UBS.

However, many analysts believe the ensuing market volatility has been unwarranted given the “idiosyncratic” flaws that left the likes of SVB and Credit Suisse exposed and caused a loss of investor confidence.

This post appeared first on NBC NEWS

    You May Also Like

    Sports

    The Kentucky Derby celebrates a major milestone in 2024, as this year’s race marks the 150th running of the traditional ‘Run for the Roses.’...

    Sports

    LOS ANGELES — As if there needed to be any more evidence of how women’s sports continue to grow, it was a raucous crowd...

    Sports

    Aaron Rodgers was scared at the possible severity of his injury when he tore his Achilles on the New York Jets’ first offensive drive...

    Sports

    The Kansas City Current have fired Carlos Jimenez, the head of its medical staff, for violating the NWSL’s non-fraternization policy. The news was first...

    Disclaimer: adviceoffate.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 adviceoffate.com | All Rights Reserved