Key Takeaways:
- First Citizens Bank has bought a majority share in the beleaguered Silicon Valley Bank.
- Meanwhile, crypto firms receive a positive response from regional banks for their banking needs.
NEW DELHI (CoinChapter.com) — First Citizens Bank (NASDAQ: FCNCA) has bought the Silicon Valley Bank, the Federal Deposit Insurance Corp. (FDIC) stated in a press release on March 26.
Per the deal, First Citizens Bancshares would acquire all the deposits, loans, and branches of Silicon Valley Bank. Regulators took control of SVB nearly two weeks after the lender ran into trouble.
The purchase included $119 billion in deposits and about $72 billion in loans, which First Citizens Bank bought at a discount of $16.5 billion. However, nearly $90 billion in securities and other assets would remain in the receivership of the FDIC.
FDIC stated that all depositors of SVB would automatically become the depositors of First Citizens Bank. Furthermore, all deposits in First Citizens Bank will remain insured by the FDIC.
US regulatory bodies, including the Federal Reserve and the Treasury Department, led war-scale efforts to safeguard the banking sector after the SVB collapse.
SVB’s collapse resulted in a contagion that led to turmoil in the banking sector. Furthermore, the collapse led to funding drying up for start-ups as investors pulled back due to fear. Venture firm NFX stated in a report that fundraising confidence for early-stage founders is low.
In the report, NFX stated that 59% of survey participants believe that the fall of SVB would make fundraising more difficult. Furthermore, firms having an account with a big bank nearly doubled from 31% to 57%.
Additionally, the collapse hurt hiring, with 7.5% of survey participants accepting hiring as their “biggest challenge since March 2022.”
Crypto Firms Turn To Regional Banks
Meanwhile, crypto firms were stranded after the collapse of two major crypto-friendly banks, Signature Bank and Silvergate Capital. Moreover, speculations of the government’s plan to cut off crypto firms’ access to the banking system had the crypto investors and firms worried.
As crypto firms’ scrambled to establish new bank relationships, help came from smaller regional banks. Additionally, other crypto companies moved their deposits to upstart banks, while others are looking to take their accounts to offshore banks.
The big banks, such as JP Morgan Chase, continued their business with crypto clients, though they remain selective about their clients. Smaller banks, such as Florida-based Surety Bank, will likely capitalize on the opportunity to expand their business by onboarding more clients.
