Monday, July 15, 2024

The FDIC says First Citizen Bank is buying “all deposits and loans” for Silicon Valley Bank

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First Citizens Bank will buy “all the deposits and loans” of Silicon Valley Bank in the wake of SVB collapse earlier this monththe The Federal Deposit Insurance Corporation announced late Sunday. SVB was the largest US bank to fail since 2008, sparking global concerns about the sector.

The new deal covers $119 billion in deposits and $72 billion in assets, the FDIC said, and “the 17 SVB subsidiaries will open as first citizens” on Monday.

The agency said that SVB depositors “will automatically become depositors of First Citizen Bank and the FDIC will continue to insure deposits.

In addition, anyone with SVB loans must continue to make payments, including escrow payments, as normal; “The terms of your loan will not change,” said the Deposit Insurance Corporation.

First Citizens, based in Raleigh, North Carolina, said the deal will preserve its strong financial position and the combined company will remain flexible, with a diversified loan portfolio and deposit base. “A prudent risk management approach will continue to protect clients and shareholders during all economic cycles and market conditions.” The statement said.

Santa Clara, California-based SVB — the 16th largest US bank by assets and the main lender to startups in the country since the 1980s — failed after a sudden influx of deposits prompted regulators to take control of the banks. industry.

Along with the FDIC, the Treasury and Federal Reserve have put in place plans to ensure that SVB customers have access to their deposits, while the Fed has introduced a new lending tool for banks in an effort to prevent a repeat of SVB’s rapid demise.

The collapse of SVB sparked a crisis of confidence among clients of similarly sized US banks, with many withdrawing their money and depositing it in larger institutions seen as too big for the government to bail out in crisis.

The turmoil also spread to Europe, where the troubled Swiss lender UBS acquires Credit Suisse.

Recently, he participated in Deutsche Bank has been troubled for a long time It fell sharply on Friday on the back of the rising cost of the lender to cover defaults, which raised fears of a widening crisis in the banking sector.

Despite global infection fears, Central banks continued to tighten monetary policy Because they focus on fighting inflation – even though the problems in the banking sector are linked to raising interest rates.

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Rosario Tejeda
Rosario Tejeda
"Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver."

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