The American First Citizens Bank takes over the fallen Silicon Valley Bank (SVB). The bank from the state of North Carolina takes over all credits and loans from government body FDIC. The seventeen branches of SVB will open on Monday as First Citizens offices.
California’s Silicon Valley Bank, mainly active in the technology sector, was unable to pay its debts after a bank run. After a bailout by the US government, the bank continued under the name Silicon Valley Bridge Bank. The SVB did a lot of business with tech start-ups.
First Citizens Bank buys slightly less than half of SVB’s assets. In total, SVB had $ 167 billion in assets, of which First Citizens Bank will own $ 72 billion. The acquiring bank receives a discount of USD 16.5 billion. The FDIC, which took over management of SVB after the collapse, retains $90 billion in assets.
Loans
The service also receives up to $ 500 million in shares in First Citizens Bank. In addition, the FDIC shares in any losses on SVB loans. FDIC estimates that the total rescue of that bank has cost about $ 20 billion.
First Citizens Bank claims to be a family business. With total assets of USD 109 billion and bank balances of about USD 90 billion, the bank is a lot smaller than SVB. Even after the bank run that led to its collapse, that bank still managed $119 billion from customers.
Panic
The past week has been a panic on the stock markets. Shares of banks and insurers fell worldwide on fears of a new banking crisis. The SVB was not the only bank with problems in recent weeks. Several American banks have collapsed and the Swiss Credit Suisse had to be rescued by UBS. The banks in the Netherlands must therefore have enough fat on their bones, argues bank president Klaas Knot of De Nederlandse Bank (DNB), who has no major concerns about the banks in his own country. “The European banks are resilient, they have increased their capital buffers in recent years.” This enables European banks to absorb any losses.
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