Embattled Silicon Valley Bank (SVB), which ran out of cash and was seized by regulators following a run on the lender, looks set for a takeover by First Citizens BancShares, which has around US$109 billion in assets and total deposits of US$89.4 billion, media reports said.
The FDIC said the purchase includes acquiring about US$72 billion (S$96 billion) of SVB’s assets at a discount of US$16.5 billion.
Earlier, SVB, which became the biggest failure for a US lender in more than a decade, took a huge loss on sales of its securities as interest rates climbed, unnerving investors and depositors, who rapidly began pulling their money.
North Carolina-based First Citizens had a market value of US$8.4 billion (S$11.2 billion) as of Friday. The regional lender has around US$109 billion in assets and total deposits of US$89.4 billion.
The collapse of SVB has sent ripples across the world, sending the US market into a tailspin. It forced investors to flee smaller banks for larger cousins, while the hit to confidence forced Credit Suisse into the arms of rival UBS last week.
A potential buyer for SVB helped cast an uneasy calm over fragile markets on Monday, which have been rattled by worries of a credit crunch and wider systemic banking stress.
It gave markets some respite as it was the first weekend in several weeks that did not bring news of fresh banking collapses, rescue deals, or emergency help from authorities to shore up confidence.
“It’s nice that there’s a buyer about,” said IG Markets analyst Tony Sycamore in Sydney, and that the weekend passed without new incidents, but without details on pricing, there was little to cling to ahead of the opening of European trade.
“It’s a little bit of calm before the next storm.” Last week ended with indicators of financial market stress flashing and Germany’s biggest lender, Deutsche Bank, in the crosshairs, with its shares sliding 8.5 per cent on Friday and the cost of insuring its bonds against default sharply up.
On Monday, bank shares in Asia were mixed: steady in Australia and Tokyo but slipping in Hong Kong, where Standard Chartered shares fell 3.5 per cent.
“It’s clearly not over,” Australia and New Zealand Banking Group Chief Executive Shayne Elliott said in an interview posted to the bank’s website, where he said the turmoil could escalate into a more significant financial crisis.