Bank stock recovers as First Citizens acquires SVB

Stock markets and bank shares have bounced back after the United States authorities announced that a regional lender had taken over most of Silicon Valley Bank (SVB), which had collapsed earlier this month.

The bank run, which had caused its failure, resulted in weeks of concern over a potential economic collapse. However, the pan-European STOXX 600 Index surged by 1.1 percent, with investors taking comfort from the SVB acquisition news. Similarly, European banks also rose by 1.4 percent after shedding 3.8 percent on Friday when Deutsche Bank sparked a rout in the sector.

FDIC announced on Sunday that the North Carolina-based First Citizens Bank had bought a large part of SVB’s deposits, assets, and loans. The acquisition will allow 17 former SVB branches to begin operating as Silicon Valley Bank, a division of First Citizens Bank, starting Monday. The US government has guaranteed the money of all their respective depositors, even those who were uninsured.

Despite the rebound in the market, some analysts warn that the crisis may not be over. Australia and New Zealand Banking Group Chief Executive, Shayne Elliott, said in an interview posted to the bank’s website that these things tend to roll through over a long period of time. However, US officials, including President Joe Biden, have repeatedly stressed that the US banking system is sound and stable, dismissing the prospect of a major economic collapse similar to the 2008 financial crisis.