US First Citizens Bank to buy all deposits of Silicon Valley Bank
3 Min Read
Losses will be shared between the FDIC and First-Citizens Bank, which intends to minimize disruption and panic to borrower customers - Silicon Valley Bridge Bank had assets amounting to almost $167 billion alongside $119 billion in deposits.
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First Citizens BancShares and SVB logos in an illustration on March 19, 2023 (Reuters)
As confirmed by the US Federal Deposit Insurance Corporation (FDIC), First Citizens Bank, based out of North Carolina - intends to buy all deposits and loans of Silicon Valley Bank (SVB).
The FDIC stated on Sunday: "The Federal Deposit Insurance Corporation entered into a purchase and assumption agreement for all deposits and loans of Silicon Valley Bridge Bank, National Association, by First–Citizens Bank & Trust Company, Raleigh, North Carolina,"
According to the FDIC statement as well, 17 former Silicon Valley Bridge Bank branches are due to launch as divisions of First-Citizens Bank on Monday. The Silicon Valley Bridge Bank was opened earlier this month by the FDIC representing SVB's asset transferee "to allow time for the FDIC to stabilize the institution and market the franchise."
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The statement notes further that losses would be shared by both the FDIC and First-Citizens Bank, which will minimize disruption and panic to borrower customers - Silicon Valley Bridge Bank had assets amounting to almost $167 billion alongside $119 billion in deposits.
Following the US federal takeover of Silicon Valley Bank and Signature Bank and the Credit Suisse merger with UBS, international banks have been witnessing a surge in deposit withdrawals, despite assurances by the banks of everything being normal.
According to Federal Reserve data on Sunday, $98.4 billion have been taken out from bank accounts by US clients - mainly from smaller banks.
As of Monday, the euro-dollar exchange rate went down to $1.0753 from the previous $1.0759, as opposed to the dollar-yen exchange rate, which went up to 131.20 yen from 130.69 yen.
At a Senate hearing on Wednesday, Treasury Secretary Janet Yellen said that if the US defaults on its debt, this would result in a massive loss of confidence in the US dollar, eventually leading to the loss of its status as the world's global reserve currency.
The recent banking crisis, which was triggered by rising interest rates, has resulted in changes at an unprecedented scale due to investors' loss of confidence in the currency. Not only have energy markets slumped to their lowest levels but the price of gold has hiked up to nearly $2,000.
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