World News | First Citizens buys struggling Silicon Valley Bank

NEW YORK, March 27 (AP) — First Citizens will buy a majority stake in Silicon Valley Bank, the tech-focused financial institution that collapsed this month, setting off a chain reaction that led to the failure of a second bank and tested confidence in the Confidence in the global banking sector.

The FDIC and other regulators have taken extraordinary steps to prevent a broader banking crisis by ensuring depositors at SVB and the failed Signature Bank have access to all their money.

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While more than half of Silicon Valley’s assets are set to remain in the U.S., the First Citizens deal, announced late Sunday, appears to achieve what regulators were looking for: greater trust in regional U.S. banks.

Shares of mid-sized banks including Keycorp , Zions and First Horizon rose 8% at the open on Monday. First Republic Bank, reeling from its collapse in Silicon Valley, jumped 23% on a $30 billion rescue package from the country’s 11 largest lenders.

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Customers of SVB will automatically become customers of Raleigh, North Carolina-based First Citizens. Seventeen former SVB branches will open Monday as First Citizens branches, the FDIC said.

European shares opened higher on Monday, with Commerzbank up 2.4 percent and BNP Paribas up 1.2 percent. Fears of banking contagion quickly spread to Europe this month, with local regulators facilitating the takeover of troubled Credit Suisse by UBS.

Shares of Deutsche Bank fell 8.5 percent on Friday due to higher interest rates and similar reasons, but the German bank rebounded 3.6 percent on Monday.

Silicon Valley, based in Santa Clara, Calif., collapsed on March 10 in a bank run after customers scrambled to withdraw money amid concerns about banks’ solvency. It was the second-largest bank failure in U.S. history after the collapse of Washington Mutual in 2008. Two days later, New York’s Signature Bank was seized by regulators following the collapse of the third-largest US bank.

In both cases, the government agreed to pay deposits, even those over the federally insured limit of $250,000, so depositors were able to access their money.

New York Community Bank agreed a week ago to buy a majority stake in Signature Bank for $2.7 billion, but the search for a buyer for SVB has taken longer.

The sale of Silicon Valley Bank involved the sale of all of SVB’s deposits and loans to First-Citizens Bank and Trust Co., the FDIC said.

The acquisition gave the FDIC a $500 million stake in First Citizens. Both the FDIC and First Citizens will share the losses and may recover loans included in the loss-sharing agreement, the FDIC said.

As of March 10, the FDIC will retain about $90 billion of Silicon Valley Bank’s $167 billion in total assets, while First Citizens will buy $72 billion at a $16.5 billion discount, the FDIC said. It estimated that the collapse of Silicon Valley Bank would cost its industry-funded deposit insurance fund about $20 billion, it said.

Founded in 1898, First Citizens Bank is said to have total assets of more than $100 billion and a national bank with more than 500 branches in 21 states. It reported a net profit of $243 million in the previous quarter. It is one of the top 20 US banks and says it is the largest family-controlled bank in the country. (Associated Press)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)