Deal betyween banks
First Citizens Bank, shortly FCB, has recently made headlines with its announcement of the acquisition of Silicon Valley Bank's US operations, following the bank's collapse.
This deal, according to a statement from the Federal Deposit Insurance Corporation (FDIC), involves First Citizens acquiring assets worth $72 billion at a discounted price of $16.5 billion.
The move is seen as a significant expansion of First Citizens' asset portfolio, providing the bank with a much-needed boost in terms of growth and expansion. With its base in Raleigh, North Carolina, First Citizens has branded itself as the largest family-run bank in the US. The bank has previously acquired over 20 other banks since the 2008 financial crisis, including financial services firm CIT Group for $2 billion in January.
The acquisition will see First Citizens control all 17 former Silicon Valley Bank branches in California, and anyone who still had money deposited with SVB will see those funds automatically transferred over to First Citizens, as per the FDIC's statement. Customers will still have deposits worth up to $250,000 insured by the FDIC, as per normal limits.
While many investors are hoping that First Citizens' takeover of SVB will provide some much-needed stability for the embattled banking sector, rising borrowing costs and cratering asset valuations may cause further banking stress. Nonetheless, the early reaction to the takeover has been positive, with many US bank stocks surging in early-morning trading. In fact, embattled First Republic led all stocks with a 30% jump in premarket trading, while Frankfurt-listed Deutsche Bank climbed 3% Monday to erase most of its losses from the previous trading session.
Given the collapse of Silicon Valley Bank and the factors that fueled it, some observers are questioning whether First Citizens is big enough to take over the second-largest bank ever to collapse in the US. However, with its history of successful acquisitions and steady growth, First Citizens is well-positioned to handle the challenges that come with integrating SVB's operations into its own.
Overall, this acquisition marks an important milestone for FCB, as it expands its operations and solidifies its position as a leading player in the US banking sector.