FILE – The Silicon Valley Bank logo is seen at a branch in Pasadena, Calif., on March 13, 2023. The Federal Deposit Insurance Corporation said Monday, March 27, that First Citizens would buy much of Silicon Valley Bank, whose bankruptcy rocked the banking sector. (AP Photo/Damian Dovarganes, File)
NEW YORK (AP) — North Carolina-based First Citizens is buying much of Silicon Valley Bank, a tech-focused bank whose bankruptcy rocked the banking industry this month.
The deal could reassure investors at a time of lack of confidence in banks, although the FDIC and other regulatory agencies had already taken extraordinary steps to prevent a further banking crisis. by ensuring that all depositors at SVB and another failed bank in the United States would be able to access all their money.
SVB clients would automatically become clients of First Citizens, which is based in Raleigh. The 17 former SVB offices would open Monday as offices of First Citizens, the FDIC said.
European stocks opened higher on Monday, with German lender Commerzbank AG rising 2.4% and French lender BNP Paribas 1.2% higher.
Investors fear that other banks may cave to the pressure of higher interest rates. Much of the attention focused Friday on Deutsche Bank, whose shares fell 8.5% in Germany, although in early trading on Monday it had recovered 3.6%. Shares and confidence in Swiss bank Credit Suisse have fallen so much this month that regulatory agencies have negotiated a takeover by rival UBS.
In the United States, Santa Clara, California-based SVB collapsed on March 10 after depositors rushed to withdraw money amid concerns about the bank’s health. It was the second-biggest 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-biggest bank collapse in the United States.
In both cases, the government agreed to cover deposits, including those over the $250,000 federally insured limit, so depositors could access their money.
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 sale announced Saturday night included the sale of all of SVB’s deposits and loans to First Citizens Bank and Trust Co., the FDIC said.
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 reported net profits of 243 million dollars. It is one of the 20 largest banks in the United States and claims to be the largest family-controlled bank in the country.
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