First Citizens Bank will buy “all deposits and loans” from Silicon Valley Bank following the SVB collapse earlier this month, the Federal Deposit Insurance Corporation announced late Sunday. SVB was the largest US bank to fail since 2008, sparking global fears about the sector.
The new transaction involves $119 billion in deposits and $72 billion in assets, and “SVB’s 17 branches will open Monday as First Citizens,” the FDIC said.
SVB depositors “automatically become First Citizens Bank depositors and the FDIC will continue to insure deposits,” the agency said.
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In addition, anyone who has loans from the SVB should continue to make payments as usual, including escrow payments; the terms of your loan will not change,” the FDIC said.
Headquartered in Raleigh, North Carolina, First Citizens said the deal will preserve its solid financial position and the combined company will remain resilient with a diverse loan portfolio and diverse deposit base. “A prudent approach to risk management will continue to protect clients and shareholders across all economic cycles and market conditions,” the statement said.
Santa Clara, California-based SVB — the 16th-largest bank in the United States by assets and a major lender to startups in the country since the 1980s — failed after a sudden deposit rush, prompting regulators to seize control take over and shake up the banking industry.
Along with the FDIC, the Treasury Department and Federal Reserve had drawn up plans to ensure SVB customers could access their deposits, while the Fed introduced a new lending tool for banks to prevent a repeat of SVB’s rapid decline.
The collapse of the SVB triggered a crisis of confidence among customers of similarly sized US banks, with many withdrawing their money and depositing it with larger institutions deemed too big for the government to bail out in a crisis.
The turmoil also spilled over into Europe, where troubled Swiss bank Credit Suisse was taken over by UBS.
Most recently, shares in long-struggled Deutsche Bank fell sharply on Friday amid rising costs for lender default cover, reviving fears that the crisis in the banking sector was spreading.
Despite global contagion fears, central banks have pushed ahead with monetary tightening as they focus on fighting inflation – although problems in the banking sector have been linked to their rate hikes.