Regulators shut SVB down on Friday, March 10, after clients withdrew $42 billion in a single day. So when SVB announced it had had to sell about $21 billion of those Treasuries at a $1.8 billion after-tax loss to cover customers’ withdrawals, it essentially sparked a run on the bank. The Treasuries SVB held had fixed interest rates at what is now below market value, thanks to the Federal Reserve’s policy of steadily raising interest rates over the last year. It was the drop in value of those bonds - rather than losses on the loans that SVB had made - that created problems for SVB and the overall banking system. With the purchase of most of SVB’s business, First Citizens will now be slightly larger than SVB had been before its collapse, with an estimated $219 billion in assets.Īs part of the deal, First Citizens is not taking on most of the $90 billion in US Treasuries that SVB was holding when regulators took over. In the wake of its collapse regulators had transferred SVB’s deposits and loans to a bridge bank. SVB, by contrast, had assets of $209 billion at that time and was the nation’s 16th largest bank. With assets of $109 billion as of December 31, First Citizens was the 30th largest US bank according to the Federal Reserve.
North Carolina-based First Citizens - offers general banking services through more than 550 branches and offices in 23 states - was about half the size of SVB at the end of last year. Merely several weeks ago, such a deal would have seemed unlikely. The collapse of SVB, followed in quick succession by Signature Bank - another US regional lender - roiled global financial markets and triggered a collapse in confidence among investors and depositors in other vulnerable banks. But SVB customers should continue to use their current branch until they hear from First Citizens.
Why almost everyone failed to predict Silicon Valley Bank's collapseĪnd the KBW Nasdaq Bank Index, which had lost more than 20% since the start of the banking crisis, was up 4% in early trading Monday before moderating to a 2% gain later in the morning.Īs of Monday, 17 branches of SVB will begin operating as “Silicon Valley Bank, a division of First Citizens Bank,” First Citizens said.
The Federal Deposit Insurance Corporation seized the assets of the bank on Friday, marking the largest bank failure since Washington Mutual during the height of the 2008 financial crisis. People stand outside of an entrance to Silicon Valley Bank in Santa Clara, Calif., Friday, March 10, 2023.
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