The acquisition of Silicon Valley Bank (SVB) by First Citizens Bank & Trust banking holding can help mitigate the turmoil that has engulfed the financial world by restoring investor confidence, says Evgeny Shatov, partner at Capital Lab.
He told Izvestia about this on March 27.
As the expert clarified, the shares of regional banks rose after this news. In addition, the shares of the acquiring company First-Citizens Bank jumped by 44%.
“The deal is concluded on fairly favorable terms for the buyer with the participation of the FDIC (Federal Deposit Insurance Corporation. — Ed.) This acquisition turns First Citizens into one of the 15 largest U.S. banks. First Citizens reported that SVB has additional business areas, including private banking services, banking services for individuals and small businesses, the deal will also expand First Citizens’ opportunities for venture capital and technology business,” Shatov explained.
The fact that First Citizens Bank & Trust Company will buy deposits and loans of Silicon Valley Bridge Bank (a bank that was created by the regulator after the SVB bankruptcy to protect depositors) was reported on March 26 on the FDIC website. The bank holding company will acquire assets worth about $72 billion. The discount will amount to $16.5 billion. About $90 billion in securities and other assets of Silicon Valley Bank will remain with the FDIC.
On March 11, it became known about the bankruptcy of one of the largest Silicon Valley banks in the United States, it was closed on March 10. As noted by Reuters, the bankruptcy of such a large credit institution was the first after the financial crisis of 2008.
On March 13, SVB customers got access to their funds. At the same time, US President Joe Biden tried to convince citizens that they could be confident in the security of the country’s banking system.
Earlier, on March 23, the White House reported that the efforts of the US administration, the Ministry of Finance and banking regulators helped the United States to stabilize the situation in the banking sector.