First Citizens Bank will buy “all deposits and loans” of Silicon Valley Bank SVB’s collapse earlier this monthThe The Federal Deposit Insurance Corporation announced Late Sunday. SVB is the largest US bank to fail since 2008, sparking global fears about the sector.
The new transaction involves $119 billion in deposits and $72 billion in assets, and “the first 17 branches of SVB will open to citizens on Monday,” the FDIC said.
Depositors of SVB “will automatically become depositors of First Citizens Bank and the FDIC will continue to insure the deposits,” the agency said.
In addition, any borrower on the SVP must continue making payments, including escrow payments, as usual; The terms of your loan will not change,” the FDIC said.
First Citizens, headquartered in Raleigh, North Carolina, said the deal will preserve its solid financial position and the combined company will be resilient with a more diversified loan portfolio and deposit base. “A prudent risk management approach will continue to protect clients and shareholders through all economic cycles and market conditions.” The report said.
Santa Clara, Calif.-based SVB — the 16th largest U.S. bank by assets and a major lender to startups in the country since the 1980s — collapsed after a sudden run on deposits, regulators seized control and stifled the banking industry.
Together with the FDIC, the Treasury Department and the Federal Reserve developed plans to ensure SVB customers had access to their deposits, while the Fed introduced a new lending tool for banks in an effort to stave off SVB’s rapid demise.
SVB’s collapse triggered a crisis of confidence among customers of US banks of the same size, with many withdrawing their money and depositing it in larger institutions, too big for the government to weather the crisis.
The turmoil spread to Europe, where the Swiss lender was in trouble Credit Suisse was acquired by UBS.
More recently, stocks Deutsche Bank in chronic trouble Stocks fell sharply on Friday on the rising cost of creditor default insurance, rekindling fears of a widening banking sector crisis.
Despite global contagion fears, Central banks have been pushed into monetary tightening Because they’re focused on fighting inflation — even if the problems in the banking sector are linked to their rate hikes.