Key Insights:
- The Federal Deposit Insurance Corporation (FDIC) announced that it had arranged with First Citizens Bank & Trust Company (FCIZP) to purchase all of SVB’s deposits and loans.
- After Washington Mutual in 2008, SVB was the second-largest bank failure in American history, causing banking industry concerns to spread throughout the world.
- March’s banking crises poured almost $300 billion into US money market funds.
Late on Sunday this week, the Federal Deposit Insurance Corporation (FDIC) announced that it had reached an agreement with First-Citizens Bank & Trust Company (FCIZP) to purchase all of SVB’s deposits and loans, which had been moved to a bridge bank by regulators following SVB’s failure earlier in the month.
According to the announcement, on Monday this week, 17 former SVB locations will start conducting business as “Silicon Valley Bank, a part of First Citizens Bank.”
The announcement also mentioned that the former customers of SVB should stick with their existing branch until First Citizens notifies them that systems have been upgraded to enable full service at its larger branch network, according to the FDIC.
Business As Usual With SVB Customers and Assets
As customers withdrew $42 billion in a single day, SVB crashed and was eventually shut down by regulators on Friday, March 10.
After Washington Mutual in 2008, SVB was the second-largest bank failure in American history, causing banking industry concerns to spread throughout the world.
As per the latest FDIC release, the agency stated that this new development covers $72 billion in assets and $119 billion in deposits, and that “SVB’s 17 branches will open as First Citizens” on Monday.
The document mentioned that the FDIC will continue to safeguard deposits and declared that SVB depositors will “automatically become depositors of First Citizens Bank.”
Any deposits, including those above the typical $250,000 per account insurance limit, will be covered by the FDIC’s agreement.
Anybody having a loan from SVB should also continue making regular payments, including escrow payments, the press release mentioned. “The terms of your loan will not change.”
CEO Frank B. Holding, the CEO of the Raleigh, North Carolina-based corporation said in a statement, that the merger will maintain First Citizen’s strong financial position, and leave the combined business with a strong customer base and a varied loan portfolio.
Through all economic cycles and market conditions, a prudent risk management approach will continue to safeguard clients and stockholders, the statement said.
Banking Crisis Pulls Almost $300 Billion Into Money Market Funds.
Money market fund inflows are mostly powered by fears about the stability of financial systems.
As a result of the series of bank runs and financial system failures in 2023, the U.S. and European banks continue to struggle with liquidity shortages as a result of tightening monetary policy.
According to statistics from Emerging Portfolio Fund Research (EPFR) obtained by the Financial Times, March’s series of banking crises has caused many investors to shift their portfolio holdings over the last two weeks, pouring almost $300 billion into US money market funds.
According to the data, Goldman Sachs, JPMorgan Chase, and Fidelity are the biggest beneficiaries of the recent inflow of capital into U.S. money market funds.
According to the Financial Times, JPMorgan’s funds received over $46 billion in inflows, while Fidelity received close to $37 billion. Goldman Sachs’ money funds received $52 billion, a 13% increase. Since the start of the Covid-19 outbreaks, the volume of inflows has increased more than at any other time in a month.
According to the BitcoinNews Twitter account, although insurance on failure for financial services companies Charles Schwab and Capital One skyrocketed this week, with the most recent seeing credit default swaps climb over 80% to 103 bps as of March 20, worry still hangs over regional banks in the United States.
BREAKING: Credit Default Swaps (CDS), insurance on default on Charles Schwab EXPLODE 😱🚨 pic.twitter.com/KJdNTq2xMm
— Bitcoin News âš¡ (@BitcoinNewsCom) March 24, 2023
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