U.S. mid-tier lenders' shares rise in pre-market after SVB deal (updated)
27/03/2023 11:08
(Updates prices, adds news and quote)
By Joice Alves
LONDON, March 27 (Reuters) - Several mid-tier U.S.
lenders' share prices rose sharply on Monday in premarket trade,
after a buyer emerged for large chunks of embattled Silicon
Valley Bank's deposits and loans, which helped inject some calm
into fragile markets.
SVB was the largest bank since the 2008 financial crisis to
collapse when California regulators closed the bank on March 10,
which sparked major turmoil in the banking sector globally.
On Monday, First Citizens BancShares FCNCA.O said it
bought all the loans and deposits of failed SVB. 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.
The Federal Deposit Insurance Corporation (FDIC), which
took control of SVB earlier this month, said in a statement it
has received equity appreciation rights in First Citizens
BancShares stock with a potential value of up to $500 million as
part of the deal.
In thin trading, First Citizens shares were up 10.7% in
premarket, while share in other U.S. lenders also rose.
First Republic Bank FRC.N jumped 25% after a
report
said U.S. authorities are considering more support for
banks, which could give the embattled regional lender more time
to shore up its balance sheet.
Shares in Keycorp KEY.N KEY.F and Western Alliance
WAL.N WAL.F were indicated 6.2% and 5.8% higher, while
Pacific West Bancorp PACW.F shares surged 8.08% in premarket.
Shares of major U.S. banks JPMorgan Chase & Co JPM.N ,
Citigroup C.N and Bank of America BAC.N advanced between
0.8% and 1.4%.
"There is relief that First Citizen Bank, one of America’s
largest family-controlled banks, has come to the rescue," said
Susannah Streeter, head of money and markets, Hargreaves
Lansdown.
"A calm of sorts has descended on the banking sector but
hopes that this move will see significant stability return may
be short-lived," she added.
European banking shares .SX7P opened sharply higher
with the SVB deal helping ease some of the anxiety in the
sector. But banks trimmed those gains, last up 1% following a
3.8% tumble on Friday led by anxiety around Deutsche Bank
DBKGn.DE .
Last week, a sharp jump in Deutsche Bank's credit
default swaps, a type of insurance for bondholders, had
exacerbated worries about the health of European banks.
(Reporting by Joice Alves, additional reporting Medha Singh;
Editing by Amanda Cooper and Toby Chopra)
((Joice.Alves@thomsonreuters.com; Twitter @joiceal;))