- Peter Hoskins and Nick Etcher
- BBC Business Correspondent
First Citizens Bankshire, a rival of Silicon Valley Bank, has announced it will buy the assets and loans of the collapsed US bank.
The failure of US bank Silicon Valley earlier this month raised concerns about the stability of other lenders, leading to sharp falls in banking stocks around the world.
In Europe, concerns about the power of Swiss banking giant Credit Suisse led to its swift takeover by rival UBS.
Markets were nervous, and bank stocks fell sharply on Friday, opening only slightly higher on Monday.
Shares of German Deutsche Bank also tumbled 14 percent on Friday before rebounding slightly. And its shares rose about 3 percent in early trading on Monday.
US regulators took over Silicon Valley Bank earlier this month, and its collapse follows the failure of another US bank, Signature Bank.
The collapse of the two banks was the largest bank failure in the United States since the 2008 financial crisis.
All 17 former Silicon Valley Bank branches will reopen under the Citizens brand starting Monday under the Silicon Valley Bank acquisition deal announced by the US Federal Deposit Insurance Corporation.
He advised Silicon Valley Bank customers to continue using their existing branch until they receive notification from First Citizens that their accounts have been fully transferred.
Headquartered in Raleigh, North Carolina, First Citizens bills itself as “America’s largest family-run bank.” He is one of the biggest buyers of troubled banks in recent years.
The company acquired about $72 billion in assets and $16.5 billion in discounted loans from Silicon Valley Bank. The Federal Deposit Insurance Corporation still owns about $90 billion in the collapsed bank’s assets.
The FDIC said the cost of a failure of Silicon Valley Bank’s deposit insurance fund would be about $20 billion.
HSBC bought the UK arm of Silicon Valley Bank 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 stimulate economic growth.
But interest rates have risen in the past year as central banks try to rein in higher rates.
A rise in interest rates affected the value of investments in which banks held some of their money, and contributed to the failure of banks in the United States.
There are fears in financial markets that other yet-to-be-emerged problems in the banking sector are likely.
Central banks around the world ensured that the banking system was safe and that lenders were well capitalized.
Sarah Haven, head of research for Europe and the Americas at Standard Chartered Bank, told the BBC’s Today program that there was a “very heated atmosphere” among investors.
“What’s driving the markets at the moment is more psychology than reality,” he added.
International Monetary Fund chief Kristalina Georgieva on Sunday called 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, a rapid transition from prolonged low interest rates to high interest rates… inevitably creates pressures and vulnerabilities,” he added.
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