First Citizens Bank Soars 54%, Hits 52-Wk High on SVB Deal, Soothes Fears
By Malvika Gurung
Investing.com — In a development that soothed investor worries over the recent banking crisis after the second and third largest banks in the US failed earlier this month, First Citizens Bank signed a deal to acquire most of the loans and deposits of the failed Silicon Valley Bank (NASDAQ:).
As a result, shares of First Citizens Bank’s parent company First Citizens BancShares Inc (NASDAQ:) soared a breathtaking 53.74% in Monday’s session and recorded a new 52-week high of $910 apiece.
Banking shares gained on Monday after the Federal Deposit Insurance Corporation (FDIC) said that the North Carolina-based First Citizens will assume ownership of some $72 billion of assets held by SVB at a discount of $16.5 billion. The said bank will also acquire more than 17 branches of the collapsed banking major.
“Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC,” said the U.S. regulator.
However, the failure of SVB is estimated to substantially hit FDIC with approximate costs of $20 billion.
The acquisition deal will propel First Citizens further up the ranks of the U.S. banking sector, increasing its total asset base by two-thirds and immediately giving it meaningful exposure to the technology sector, although it isn’t clear how many of SVB’s clients will seek a new bank after the events of the last month, stated an Investing.com report.