SVB loans, deposits sold to First Citizens Bank

In this file photo taken on March 20, 2023, the SVB Private logo is displayed outside of a Silicon Valley Bank branch in Santa Monica, California. First Citizens Bank bought “all the deposits and loans” of Silicon Valley Bank after it went bankrupt at the beginning of March, a U.S. banking agency said on March 26, 2023.
| Photo Credit: AFP

First Citizens Bank will buy “all the deposits and loans” of Silicon Valley Bank after it went bankrupt at the beginning of March, a U.S. banking agency said 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.

Depositors of SVB will “automatically become depositors of First Citizens Bank”, added the FDIC, which will continue to insure deposits.

Also Read | Explained: What caused Silicon Valley Bank’s failure?

SVB— the United States’ 16th biggest bank by assets and a key lender to startups in the country 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 had set out plans to ensure SVB customers would be able to access their deposits, while the Fed introduced a new lending tool for banks in an effort to prevent a repeat of SVB’s quick demise.

SVB’s collapse sparked a crisis of confidence among the customers of similarly sized U.S. banks, with many withdrawing their money and depositing it into bigger institutions seen as too big for the government to not bail them out in 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 heavily on Friday on the lender’s surging cost of default cover, reigniting fears about a widening banking sector crisis.

Despite global contagion fears, central banks have pushed on with monetary tightening as they focus on fighting inflation— even though the troubles in the banking sector have been linked to their rate hikes.