First Republic Bank’s HQ in San Francisco.
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First Republic and other bank stocks jumped Monday on news that SVB has a buyer.
First Citizens Bank has agreed to buy much of Silicon Valley Bank’s assets, the FDIC said.
The rebound in regional bank stocks reflect easing investor fears around a possible banking crisis.
First Republic Bank shares rose as much as 18% on Monday after news that collapsed Silicon Valley Bank has finally found a buyer after a two-week search.
First Citizens Bank has agreed to purchase a big chunk of SVB’s assets and will take on all of its deposits and loans, the FDIC said late Sunday. The agency has been seeking a buyer since seizing the California-based lender over two weeks ago.
Shares of First Republic Bank were up about 18% at $14.63 soon after the open Monday, after rising almost 30% in premarket trading. Embattled FRB itself secured a $30 billion rescue package from larger rivals last week, and its shares are down nearly 88% this year so far.
San Francisco-based First Citizens Bank & Trust Co. has agreed to acquire about $72 billion of assets at a discount of $16.5 billion from Silicon Valley Bridge Bank, which was set up by the FDIC to protect the failed SVB’s customer deposits. The FDIC will hold onto another $90 billion in assets.
First Citizens Bancshares’s share price was up 43% at $832.64 at last check after the news Monday. The stock is up 10% year to date.
The SVB deal has further helped settle jitters about the health of the banking sector after the collapse of the California lender and the forced takeover of Credit Suisse by UBS.
“Helping to repair sentiment towards the sector was the news that First Citizens Bank is to buy $72 billion of Silicon Valley Bank assets at a discount of $16.5 billion. Together with HSBC’s purchase of SVB’s UK operations and UBS’ takeover of Credit Suisse, investors will be hoping for some stability from now on in the broader sector,” Russ Mould, investment director at AJ Bell, said in a note.
First Republic’s gains led a pack of US regional bank stocks higher, after they were hit hard by the banking turmoil that rippled through the market this past month. PacWest added 4%, Western Alliance Bancorp rose 6%, and Zions Bancorp was up 3.6% on Monday.
SVB was shut down and taken over by regulators on March 10 after a historic bank run on its deposits that sent shockwaves through the US banking system. The uptick in regional bank stocks now reflect an easing in investor fears of further banking turmoil.