In this file photo taken on March 20, 2023, the SVB Private logo is displayed outside a Silicon Valley Bank branch in Santa Monica, California. First Citizens Bank bought “all deposits and loans” of Silicon Valley Bank after it filed for bankruptcy in early March, a US banking agency said on March 26, 2023. | Photo Credit: AFP
First Citizens Bank will buy “all deposits and loans” of Silicon Valley Bank after it filed for bankruptcy in early March, a US banking agency said on Sunday.
The transaction covers $119 billion in deposits and $72 billion in assets, and “SVB’s 17 branches will open as First Citizens” on Monday, the Federal Deposit Insurance Corporation said.
SVB depositors will “automatically become depositors of First Citizens Bank”, the FDIC added, which will continue to insure deposits.
Also read | Explained: What caused Silicon Valley Bank to fail?
SVB—the United States’ 16th-largest bank by assets and a major lender to the country’s startups since the 1980s—collapsed after a sudden run on deposits, prompting regulators to seize control .
Along with the FDIC, the United States Treasury and Federal Reserve set out plans to ensure SVB customers can access their deposits, while the Fed introduced a new lending tool for banks in an effort to prevent recurrence of rapid death of SVB.
The collapse of SVB caused a crisis of confidence among customers of similar-sized US banks, with many withdrawing their money and depositing it in larger institutions seen as too big for the government to avoid bail out of a crisis.
The turmoil also spread to Europe, where troubled Swiss lender Credit Suisse was taken over by UBS.
Most recently, shares in long-troubled Deutsche Bank fell sharply on Friday on the lender’s rising cost of default cover, reigniting fears about a widening crisis in the banking sector.
Despite fears of a global contagion, central banks have continued monetary tightening as they focus on fighting inflation— even as turmoil in the banking sector has been linked to their rate hikes.
