North Carolina-based First Citizens has agreed to acquire the collapsed tech industry-focused financial institution, Silicon Valley Bank (SVB). This acquisition comes after recent concerns over the health of the banking industry, following the fall of SVB earlier this month. The deal is expected to reassure investors and restore confidence in banks.
The Federal Deposit Insurance Corporation (FDIC) and other regulators have already taken extraordinary measures to prevent a broader banking crisis. They guaranteed that depositors in SVB and another failed US bank would be able to access all of their money. Customers of SVB will now become customers of First Citizens, with SVB’s former branches reopening as First Citizens branches on Monday.
European shares opened higher on Monday, with German lender Commerzbank AG up 2.4% and BNP Paribas up 1.2%. However, investors remain concerned that other banks may also crumble under the pressure of higher interest rates.
The acquisition involves the sale of all deposits and loans of SVB to First-Citizens Bank and Trust Co. The FDIC will receive First Citizens shares worth $500 million, and both the FDIC and First Citizens will share in losses and the potential recovery on loans included in a loss-share agreement.
First Citizens Bank, founded in 1898, has over $100 billion in total assets and more than 500 branches in 21 states, as well as a nationwide bank. It is one of the top 20 US banks and the largest family-controlled bank in the country.
Source: news4jax
