The buyer for the bank failure at Silicon Valley Bank has been identified. This was the beginning of financial turmoil still felt in financial markets.
First Citizen Bank is self-described to be America’s largest family-controlled bank. SVB was purchased by the Federal Deposit Insurance Corporation (FDIC), the US regulator. The FDIC took control of the lender earlier in the month as depositors tried to withdraw their money.
In the days after the collapse , the UK arm of SVB had been purchased by HSBC.
First Citizen Bank will take over all deposits and loans, valued at $119bn. On Monday, 17 SVB branches will be reopened as First Citizen Banks. As a result, all SVB customers will automatically become First Citizen Bank customers.
SVB assets worth $72bn are being purchased at a discount price of $16.5bn. (PS13.49bn). About $90bn (PS73.6bn), are being left with FDIC.
The FDIC stated that the FDIC has reduced the deposit insurance fund, which banks pay into in the event of such a situation, by $20bn (PS16.34bn).
The FDIC, a US state corporation, provides deposit insurance to customers of US savings and commercial banks.
After a bank panic began , SVB became the preferred bank for start-ups and tech companies.
Investors and depositors were shocked when SVB’s share prices plummeted. SVB’s security, which is usually stable, lost its value as interest rates rose. Attempts to sell shares to raise money failed and the bank became insolvent.
It was the second-largest bank failure in US history, and it triggered the worst banking crisis since 2008’s financial crash.
Credit Suisse, Switzerland’s second-largest lender, was hit hard by the turmoil. It was then forcibly purchased by UBS, its long-standing rival.
Saudi National Bank, the largest shareholder of Credit Suisse, stated that it would not continue to invest in the Swiss lender if necessary. This triggered the most recent crisis, which led to the takeover.
The comments were made by the chair of Saudi National Bank on Monday morning. He resigned for personal reasons.
Friday saw Germany’s largest bank become the focal point in a wave selling stocks across all areas of banking and financial stocks.
In volatile trading Europe-wide, shares fell by more than 14% during one point.