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Silicon Valley Bank to be acquired by rival First Citizens Bank

Troubled Silicon Valley Bank will now be taken over by First Citizen Bank.
Troubled Silicon Valley Bank will now be taken over by First Citizen Bank. Copyright Steven Senne/AP
Copyright Steven Senne/AP
By Euronews with AP
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All of SVB's deposits and loans will be taken over by its rival First Citizens Bank, US regulators said late on Sunday.

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The deposits and loans of collapsed US lender Silicon Valley Bank (SVB) are being bought by rival First Citizens, US regulators said late on Sunday.  

Customers of SVB automatically will become customers of First Citizens, which is headquartered in Raleigh, North Carolina. The 17 former branches of SVB will open as First Citizens branches on Monday.

The collapse of Silicon Valley Bank on March 10 prompted the US Federal Deposit Insurance Corp (FDIC) and other regulators to act to protect depositors to prevent broader financial turmoil. 

The ripples were felt in Europe too, where Credit Suisse was forced into a takeover by Swiss rival UBS earlier this month after its share price tumbled.

SVB, based in Santa Clara, California, failed after depositors rushed to withdraw money amid fears about the bank’s health. It was the second-largest bank collapse in US history after the 2008 failure of Washington Mutual.

On March 12, New York-based Signature Bank was also seized by regulators in the third-largest bank failure in the US.

In both cases, the government agreed to cover deposits, even those that exceeded the federally insured limit of $250,000 (€232,000), so depositors at Silicon Valley Bank and Signature Bank were able to access their money.

The mid-sized First Republic Bank, which serves a similar clientele as Silicon Valley Bank and appeared to be facing a similar crisis, was in turn battered by investors worried that it, too, might collapse. That led 11 of the biggest banks in the country to announce a $30 billion (€27.9 billion) rescue package.

The acquisition of SVB by First Citizens gives the FDIC shares in the latter worth $500 million (€465 million). Both the FDIC and First Citizens will share in losses and the potential recovery on loans included in a loss-share agreement, the FDIC said.

First Citizens Bank, which was founded in 1898, says it has more than $100 billion (€92.9 billion) in total assets, with more than 500 branches in 21 states as well as a nationwide bank. It reported a net profit of $243 million (€225 million) in the last quarter.

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