A few weeks ago, Silicon Valley Bank, one of the largest banks in California, collapsed due to the impossibility of returning all the money deposited to its frightened customers, who saw the wolf’s ears and ran to withdraw their money before everything went down the drain.
Faced with this situation, the U.S. Federal Reserve (the country’s central bank) seized the bank’s accounts, whose ruin affected other banks providing similar services. Now, according to the Financial Times, the Federal Deposit Insurance Corporation has announced that First Citizens Bank, one of the largest purchasers of failed banks in the country, has bought Silicon Valley Bank from the U.S. public entity and will take over all the deposits.
The head of First Citizens, Frank Holding Jr. belongs to a large family business that makes bank loans to businesses, as well as buys banks that are on the verge of failure or, like Silicon Valley Bank, have already passed through the Grim Reaper’s scythe. “We appreciate the confidence the FDIC has placed in us,” he said. “First Citizens has a proud history of growing organically and through strategic acquisitions.”
The agreement reached with First Citizens involves the purchase of Silicon Valley Bank assets valued at $72 billion at a discount. The Federal Deposit Insurance Corporation would take about $90 billion, including securities and other assets of the failed bank.
Both entities would share both potential losses and potential recoveries on loans once made by Silicon Valley Bank, thereby providing greater protection for customers against potential credit losses.
Some of the links added in the article are part of affiliate campaigns and may represent benefits for Softonic.
