The STOXX banks index rose 2.3% in early trading, after sinking 3.8% on Friday, and largely outperformed the broader stock market, with the pan European STOXX 600 index rising 1.1%.
First Citizens BancShares Shares bought all the loans and deposits of SVB and gave the Federal Deposit Insurance Corp equity appreciation rights in its stock worth as much as $500 million in return, the FDIC said in statement. Frankfurt-listed shares in First Citizens rose 9.4%.
The Frankfurt-listed shares of several mid-tier U.S. lenders also rose sharply on Monday.
First Citizens said the transaction was structured to preserve its solid financial position and the combined company remains resilient with a diverse loan portfolio and deposit base.
Under the deal, unit First–Citizens Bank & Trust Company will assume SVB assets of $110 billion, deposits of $56 billion and loans of $72 billion.
“Prudent risk management approach will continue to protect customers and stockholders through all economic cycles and market conditions,” the statement said.
SVB was the largest bank since the 2008 financial crisis to collapse when California regulators closed the bank on March 10 which sparked massive market disruption and heightened stresses across the banking sector globally.
The FDIC said the purchase of about $72 billion of SVB’s assets came at a discount of $16.5 billion.
“The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) to be approximately $20 billion. The exact cost will be determined when the FDIC terminates the receivership,” it said.
Approximately $90 billion in securities and other assets from SVB will remain in receivership for disposal, the regulator added.
