Securing the future of Silicon Valley Bank has taken time – but with the help of $20billion (£16.7billion) of funds from the federal insurance scheme, it has been done.
The buyer is fast-growing North Carolina-based First Citizens Bancshares, a family-controlled lender.
It is acquiring all of SVB’s loans, deposits and branches but leaving $90billion of securities, whatever they may be, with the authorities.
There is a pattern to the US bank rescues, as healthier institutions see opportunities with SVB and Signature. Interviewed on CNBC, First Citizens chairman Frank Holding was delighted, arguing his bank is a specialist in relationship banking.
Rescue: North Carolina-based First Citizens Bancshares is acquiring SVB’s loans, deposits and branches but leaving $90bn of securities, whatever they may be, with the authorities
It will need to be if it is to retain Silicon Valley’s most wealthy tech firms and individuals as customers.
Still uncertain is the fate of San Francisco-based First Republic. The shares of the 14th-largest lender have been up and down like a yo-yo.
A large proportion of First Republic deposits are uninsured (above $250,000). A potential run was stabilised when a posse, rounded up by JP Morgan, injected deposits of $30billion.
First Republic’s future as a standalone bank is still unsettled. Investment bankers have been called in to advise, the dividend has been suspended and regulators are scrutinising the sale by executives, including the founders, of millions of dollars of the firm’s stocks in two months before the crisis.
Shares, which traded at $147 earlier this year, are changing hands at $14.30. Bonds are at a steep discount to face value.
The ultimate fate of First Republic is unknown. A common thread running through this year’s banking crisis is the determination of the authorities, on both sides of the Atlantic, to find safe homes for the assets.
SVB in the UK has been absorbed by HSBC. Signature has been bought by New York Community Bancorp and Credit Suisse by its bigger rival UBS.
In the effort to get failed banks off its hands, the US Federal Deposit Insurance Corporation has shown a willingness to absorb losses.
The flight to safety goes on with Goldman Sachs, JP Morgan and Fidelity among the biggest winners with their US money market funds – largely invested in short-term US treasuries – taking in $286billion (£238billion) in March so far.
That is not a vote of confidence in the banking system.
The backbone of the UK economy is made up by small businesses. So it is hard to ignore the latest survey showing how they are suffering from post-Brexit customs problems.
The Federation of Small Businesses (FSB) warned that soaring costs and goods shortages are big worries for the sector, along with excessive customs paperwork.
It found that one in ten small firms have stopped trading internationally over the last five years because of customs as well as other burdens.
That is certainly not a great headline and the kind of number latched on to by those still regretting the UK’s departure from the EU.
Turn the survey on its head, however, and it might be regarded as positive – with nine out of ten firms adjusting to the new situation even at a cost.
A friend in the natural beauty business is doing a roaring trade, having set up logistics arrangements in Holland.
When Britain joined the Common Market in 1975, there were loud complaints from commerce about having to conform to Brussels standards.
Many problems – which the FSB identifies, including higher costs, supply chain and logistics – are as much to do with Covid-19 and Ukraine as the EU.
A ‘Single Trade Window’ to simplify small firms’ dealings with Europe would be terrific as it is still the most critical export market.
Now Northern Ireland is nearly done and dusted there must be some optimism that remaining border blockages can be eased.
Of real worry for micro and smaller enterprises are bank closures, with Barclays adding a further 14 branches to its 2023 closure list of 55.
The shuttering of branches from Llandeilo in Wales to Cambridge condemns customers to using already over-burdened Post Office counters or waiting for a mobile van or pod (whatever that maybe) to spring up.
Vanishing bank branches also damage struggling high streets and drive consumers, seeking services, to fringe, less reliable players.
As interest rates rise, borrowers and savers are more in need of customer service – not less.