- Peter Hoskins and Nick Edser
- BBC Business Correspondent
First Citizens Bankshire, a competitor to Silicon Valley Bank, announced the purchase of the assets and loans of the collapsed US bank.
The failure of the US bank Silicon Valley earlier this month raised concerns about the stability of other lenders, which led to sharp falls in bank stocks around the world.
In Europe, concerns about the power of Swiss banking giant Credit Suisse led to its precipitous takeover by rival UBS.
Markets were tense, and banking stocks fell sharply on Friday, only to open slightly higher on Monday.
German Deutsche Bank shares also fell by 14 percent on Friday, to return and rise slightly. And with the opening of trading on Monday, its shares rose by about 3 percent.
US regulators acquired Silicon Valley Bank earlier this month, and its collapse was quickly followed by the failure of another US bank, Signature Bank.
The collapse of the two banks was the largest banking failure in the United States since the 2008 financial crisis.
Under the Silicon Valley Bank acquisition deal announced by the US Federal Deposit Insurance Corporation, all 17 former Silicon Valley Bank branches will reopen under the First Citizens brand on Monday.
He advised Silicon Valley Bank customers to continue using their existing branch until they receive notification from First Citizens that their account has been fully transferred.
Headquartered in Raleigh, North Carolina, First Citizens bills itself as “America’s Largest Family-Operated Bank”. He has been one of the biggest acquirers of troubled banks in recent years.
The company bought about $72 billion in assets and loans from Silicon Valley Bank, at a discount of $16.5 billion. The Federal Deposit Insurance Corporation will still hold about $90 billion of the collapsed bank’s assets.
The FDIC said the cost of the Silicon Valley bank’s failure of the Deposit Insurance Fund would be about $20 billion.
The UK arm of Silicon Valley Bank was bought by HSBC earlier this month for £1.
risk of rising interest rates
Interest rates were cut sharply during the 2008 global financial crisis, and again during the COVID-19 pandemic, as central banks around the world sought to encourage economic growth.
But interest rates have risen over the past year as central banks try to rein in higher rates.
Those increases in interest rates hurt the value of the investments in which banks kept some of their money, and contributed to the failure of banks in the United States.
There is fear in the financial markets of the possibility of other problems in the banking sector, which have not yet appeared.
Central banks around the world ensured that the banking system was safe and that lenders were well capitalized.
Sarah Hewen, head of Europe and the Americas research at Standard Chartered Bank, told the BBC’s Today programme, there was a “very overheated environment” among investors.
“At the moment what is driving the markets is psychology rather than reality,” she added.
International Monetary Fund chief Kristalina Georgieva said Sunday there was a “need for vigilance” given the turmoil in the banking sector and warned that “risks to financial stability have clearly increased”.
“At a time when debt levels are high, the rapid transition from a prolonged period of low interest rates to much higher interest rates… inevitably generates pressures and vulnerabilities,” she added.
