First Citizens announces that it will acquire Silicon Valley Bank and calms the nerves in the market

First modification: 03/27/2023 – 18:14

The fact that a buyer emerged for most of Silicon Valley Bank’s embattled deposits and loans on Monday, March 27, helped inject some calm into the fragile markets.

Through a statement, the Federal Deposit Insurance Corp. (FDIC) revealed that First Citizens BancShares, an entity based in Raleigh, North Carolina, will keep $110 billion in assets from the SVB, which collapsed. on March 10, leaving thousands of depositors in uncertainty and causing turmoil on world stock markets.

At the time of its fall, SVB had about $167 billion in assets and $119 billion in deposits. Some $90 billion will remain in receivership for disposal by the FDIC, the note indicates.

The volatility of the markets since then has not been free: SVB was the largest bank since the 2008 financial crisis to fail and led to a similar collapse at Signature Bank. To add more spice to the stock market turmoil, days later Switzerland’s second-largest bank had to accept a bailout from its main rival UBS.

But market concerns eased on Monday after First Citizens’ announcement, although investor attention is now on First Republic Bank, a badly embattled lender trying to close potential purchase deals after losing 90% of its value. market so far this month.

In addition to keeping a close eye on First Republic Bank, the market has also been trying to anticipate which other banks might be next to fall as the banking system trembles under pressure from the highest interest rates in decades.

The broader concern has been that weak banks could cause a pullback in lending to small and medium-sized businesses across the United States. That, in turn, could lead to fewer hiring, less growth, and a higher risk of recession.

With Reuters and AP