First Citizens will take over "all deposits and loans" of SVB, and "the 17 branches of SVB will open as First Citizens" this Monday, announced on the night of Sunday to Monday the US banking regulator (FDIC) in a statement.
The transaction includes $72 billion in assets, which were bought at a discount by First Citizens. In addition, SVB had, at the time of its bankruptcy on March 10, $ 119 billion in deposits, details the FDIC.
The US deposit insurance scheme, managed by the FDIC, will absorb some $20 billion in losses.
SVB is the biggest bank failure in the United States since 2008, and it has destabilized the entire banking sector – some reminiscent of the beginnings of the 2008 financial crisis and its global consequences.
Financial authorities on both sides of the Atlantic had to intervene urgently to limit contagion.
In Europe, Credit Suisse, weakened for several years, has paid the costs of the turbulence: the second Swiss bank was bought urgently by its compatriot UBS to avoid bankruptcy.
In the United States, three banks have fallen: SVB, Signature Bank and Silvergate Bank. And several regional banks have particularly suffered on the stock market.
First Citizens itself has lost 23% of its stock market valuation since the beginning of January. Another institution under pressure, the regional bank First Republic has seen its valuation drop by 80% in a few days.
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Close to tech circles, SVB suddenly found itself in trouble after the announcement of the sale of $ 21 billion of financial securities, with a loss of $ 1.8 billion, and its intention to raise capital.
Silicon Valley Bank (SVB) offices in Tempe, Arizona, March 14, 2023 © REBECCA NOBLE / AFP/Archives
Among the factors that precipitated the bankruptcy was the rapid rise by the US central bank (Fed) of its rates, from almost zero to more than 4% in less than a year to fight inflation.
Faced with massive requests for withdrawals, the authorities deemed SVB insolvent on 10 March and took control of its assets.
A new entity reopened on March 13 under the name of Silicon Valley Bank Bridge with a boss appointed to manage current affairs, pending a decision on its fate.
All loans and deposits of this entity will now be managed by First Citizens, known for its series of takeovers of troubled banks in recent years. The FDIC said it retains some $90 billion in "other assets."
Last week, the FDIC announced a similar agreement for the takeover of part of Signature Bank by Flagstar Bank, a subsidiary of New York Community Bancorp.
Flagstar took over Signature's 40 agencies and most of the $88.6 billion in deposits. But about $60 billion in loans and $4 billion deposited online remain under the control of authorities.
© 2023 AFP