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MARCH 27, 2023

FIRST CITIZENS BANCSHARES TO THE RESCUE

First Citizens BancShares has announced that they will be taking over all of the loans and deposits of the failed Silicon Valley Bank. According to Federal Deposit Insurance Corporation (FDIC), First Citizens Bank has agreed to acquire a significant portion of the assets at a discount of approximately $16.5 billion. The total value of the assets being acquired is stated to be $72 billion.

Luckily for the customers of SVB, they will still be able to use their accounts, and branches will still be open as usual. This comes as a relief, as customers no longer need to worry about losing their money or not being able to access their accounts.

U.S. CONSIDERS BOOSTING EMERGENCY FUNDING

The U.S. government may increase the amount of money available for banks to borrow from the Federal Reserve’s emergency lending program. This could be good news for First Republic Bank, as it might give them more time to strengthen their financial situation. While officials have not yet made a decision on the extent of their support for FRC and the banking sector, this initiative is among several options being evaluated at this stage.

RELATIVE STABILITY

First Republic’s shares rose by 25% before the official opening of the stock market on Monday. The S&P500 stock futures also went up by 0.3%, indicating a positive trend in the overall stock market. European bank stocks did not report new updates over the weekend, therefore, the European markets remained relatively the same.

Although the value of Deutsche Bank’s shares went down last Friday, it has gone up today by 3%. Meanwhile, UBS, which is merging with Credit Suisse, saw a small drop in value of 1%.

GOVERNMENT AND FED INTENTIONS TO PROTECT BANK DEPOSITS

President Joe Biden and Treasury Secretary Janet Yellen emphasized that the US government is prepared to safeguard bank deposits if there is more financial trouble. Also, while the Federal Reserve increased its benchmark rate, they also suggested that they may not increase the rate higher in the future because the banking crisis is expected to slow down the economy.

CUSTOMERS SEEK HAVEN FOR THEIR MONEY

According to a report by CNBC’s Hugh Son, the rate at which people are moving their deposits from smaller banks to bigger ones has slowed down in recent days. Instead, people now seem to be moving their money to bigger and more diverse banks like JPMorgan Chase and Bank of America – this could be because of the quick collapse of SVB earlier this month. It has also been reported that customers have been putting their money into money market funds. In just the last month, more than $300 billion has gone into these funds, which now hold a record amount of $5.1 trillion.

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