By Stefan J. Bos, Chief International Correspondent Worthy News
NEW YORK (Worthy News) – U.S.-based Silicon Valley Bank, which collapsed after a bank run caused by troubled policies, will be sold to First Citizens BancShares Inc. (FCNCA), several sources confirm.
FCNCA agreed to buy Silicon Valley Bank, which regulators seized following a run on the lender.
According to a statement from the Federal Deposit Insurance Corp, the Raleigh, North Carolina-based lender entered into a purchase and assumption agreement for all deposits and loans of SVB.
“First Citizens Bank & Trust Co will buy all of Silicon Valley Bank’s (SIVB.O) deposits and loans from the Federal Deposit Insurance Corporation (FDIC),” the regulator added in a statement.
Silicon Valley Bank collapsed this month just days after it announced significant losses, creating one of the biggest bank failures in the U.S. since the Great Recession and sparking a government plan to protect depositors.
The closure capped tumultuous days for SVB—a lender to technology startups at a difficult time of inflation and rising interest rates.
The troubles began after it announced it had sold $21 billion in securities at a loss of $1.8 billion and would seek to raise $2.25 billion in capital.
Analysts said high deposit outflows prompted the move at the bank due to a broader downturn in the startup industry.
However, there were also signs of mounting uncertainty about the banking system.
Days earlier, the cryptocurrency-focused Silvergate Bank announced it would wind down on March 8 due to losses suffered in its loan portfolio.
Two days later, upon announcement of an attempt to raise capital, the bank run occurred at the giant Silicon Valley Bank, causing it to collapse and be seized by regulators that day.
Soon after, Signature Bank, a New York-based regional bank that also became a leader in cryptocurrency lending, shuttered suddenly.
With turmoil spreading, 11 banks joined forces to inject $30 billion into First Republic Bank, another troubled bank, on March 16 to stem the outflow of depositors there. They also wanted to reassure jittery consumers and investors.
Yet by then, the bank volatility in the United States spread internationally, with Switzerland’s UBS pushed to take over Credit Suisse to avoid the collapse of a ‘too big to fail’ institution.
The overnight announcement that the Silicon Valley Bank would be sold to FCNCA came ahead of market openings in Europe and aimed to stabilize the increasingly volatile banking sector.
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