Silicon Valley Bank is to be acquired by North Carolina-based First Citizens Bank & Trust in a sale involving all of SVB's deposits and loans. The deal could reassure investors at a time of shaken confidence in banks.
The Silicon Valley Bank failure is the old story of what happens when short-term depositors want their money back from a bank with only long-term assets.in a $2.7-billion deal a week ago, but the search for a buyer for SVB took longer.
After First Republic Bank came under heavy selling by panicked investors, 11 of the biggest banks in the country announced a $30-billion rescue package. The money has given First Republic a lifeline while it reportedly seeks a buyer.to First Citizens, the FDIC said. The acquisition gives the FDIC shares in the latter worth $500 million. Both the FDIC and First Citizens will share in losses and the potential recovery on loans included in a loss-share agreement, the FDIC said.The Silicon Valley Bank bailout has tech elites feeling attacked. Author Malcolm Harris reminds us of a time when the weapons they feared were bombs, not mean tweets.
The FDIC will retain about $90 billion of SVB’s total assets of $167 billion as of March 10, while First Citizens will acquire $72 billion at a discount of $16.5 billion, the FDIC said. It said it estimates that SVB’s failure will cost its industry-funded Deposit Insurance Fund about $20 billion. First Citizens Bank was founded in 1898 and says it has more than $100 billion in total assets, with more than 500 branches in 21 states as well as a nationwide bank. It reported net profit of $243 million in the last quarter. It is one of the top 20 banks in the U.S. and says it is the largest family-controlled bank in the country.
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