Rival First Citizens BancShares acquires bankrupt U.S. lender SVB

First Citizens BancShares, the well-known American commercial banking company, has reportedly planned to purchase the holdings and loans of bankrupt U.S. lender Silicon Valley Bank (SVB).

The purchase was well received by investors, driving up the First Citizens stock by over 40%.

Apparently, this increase contributed to wider advances in banking shares, which have been in trouble since SVB’s failure prompted doubts about the sector’s viability.

Concerns about the stability of the dominant Swiss bank Credit Suisse prompted rival UBS to swiftly acquire the company in Europe.

The acquisition of SVB ends a story that began earlier this month when a run on the bank prompted U.S. regulators to assume control. Following its demise, yet another U.S. lender, Signature Bank, also failed quickly.

The massive failure of these two banks represented the largest collapse of banks in the United States since the financial meltdown of 2008.

All 17 of the former SVB locations will launch on Monday using the First Citizens name as per the terms of the SVB buyout agreement. Customers of SVB are recommended to keep using their current location until they hear from First Citizens Bank that their bank account has been completely transferred over.

For the uninitiated, First Citizens bills itself as the largest family-controlled bank in America and is headquartered in Raleigh, North Carolina. In recent years, it has been among the biggest buyers of struggling banks.

First Citizens purchased approximately $72 billion in assets from SVB at a $16.5 billion discount, according to the Federal Deposit Insurance Corp, the United States financial watchdog that confirmed the deal. This transaction would increase the size of the bank to one of the top 25 in the country.

The FDIC stated that it would continue to be in charge of around $90 billion of SVB’s assets and projected that the collapse of SVB could cost its deposit insurance fund approximately $20 billion. Additionally, it will acquire a $500 million ownership investment in First Citizens.

Source credit: https://www.bbc.com/news/business-65084248

Puja More

Puja More holds a graduate degree in Computer Science from the University of Pune. Nurturing her passion of playing with words however, Puja undertook content writing as a career path and boasts of rich experience in content production, copywriting, and digital marketing. Presently, Puja writes articles on technology, business, and healthcare for playthemusic.biz and a few similar portals.