Several flailing regional banks got a boost on Monday after First Citizens Bank agreed to buy failed Silicon Valley Bank more than two weeks after its sudden collapse.
The Federal Deposit Insurance Corporation announced the move overnight on Sunday. The North Carolina-based bank agreed to purchase some $72 billion of SVB’s assets for a discounted $16.5 billion and the transfer of deposits worth $56 billion, according to the FDIC.The move sent shares of First Citizens surging. The bank, which has more than 500 branches in nearly two dozen states, saw its stock soar by a massive 42% on Monday morning following the revelation.
PacWest Bancorp rose by 9%, and Western Alliance Bancorp grew by nearly 5%, while the SPDR S&P Regional Banking ETF, which tracks the performance of regional banks, was up more than 2% since news of the acquisition. The FDIC and First Citizens Bank also entered into a “loss-share transaction” on the commercial loans it purchased of the former bridge bank. The FDIC and First Citizens will share in the losses and any recoveries on the loans covered by the loss-share agreement, according to the FDIC.
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