Latest Developments In Banking Sector Crisis. All You Need To Know

Paris:

Silicon Valley Bank is largely being taken over by another US lender in the final episodes of the three-week financial turmoil.

Here are the latest developments:

– SVB takeover –

SVB, a major lender to the tech industry since the 1980s, earlier this month became the largest US bank to fail after a rush for deposits since the 2008 global financial crisis.

Its collapse has rocked stock markets and shares of other banks as investors worry about the health of the global financial system.

North Carolina-based First Citizens Bank said Monday it has agreed to “purchase substantially all of the loans and certain other assets and assume all of the customer deposits and certain other liabilities” of the SVB.

First Citizens Bank will take over SVB’s 17 branches as part of the agreement.

The transaction involves the sale of $72 billion in assets at a $16.5 billion discount, according to the US Federal Deposit Insurance Corporation (FDIC), which took control of SVB on March 10 .

Founded in 1898, First Citizens is the largest family-owned lender in the United States.

– Consequences of Credit Suisse –

The head of the Saudi National Bank, the main shareholder of troubled lender Credit Suisse, has resigned almost two weeks after his comments contributed to the Swiss lender’s demise.

Ammar AlKhudairy resigned for personal reasons, the Saudi bank said on Monday.

Credit Suisse shares plummeted on March 15 after AlKhudairy said the Saudi bank would not increase its 9.8 percent stake due to regulatory restrictions.

Credit Suisse snagged a $54 billion central bank lifeline to restore investor confidence.

But fears over the health of the broader financial sector led to its takeover by domestic rival UBS on March 19 in a government-brokered emergency deal.

Separately, the Swiss financial regulator Finma is investigating how it can hold the heads of Credit Suisse accountable for the bank’s problems, according to the Swiss weekly NZZ am Sonntag.

– Deutsche Bank Recovery –

Deutsche Bank shares rose Monday on the Frankfurt Stock Exchange after losing last week amid concerns of contagion from the SVB and Credit Suisse debacles.

Shares of Germany’s largest lender closed 8.5 percent lower on Friday after falling as much as 14 percent.

The share price plummeted after the cost of insuring the bank’s debt against defaults skyrocketed.

– IMF Warning –

International Monetary Fund chief Kristalina Georgieva warned on Sunday that risks to financial stability had increased following the recent turmoil.

The sector’s crisis has been linked to rate hikes imposed by central banks to combat skyrocketing inflation.

The rate hikes have reduced the value of lower-yielding bond portfolios that banks had built up before monetary tightening.

Georgieva said the “quick” move from a long period of low interest rates to much higher borrowing costs “inevitably creates stress and vulnerabilities, as illustrated by recent developments in the banking sector in some advanced economies.”

(Except for the headline, this story was not edited by NDTV staff and was published by a syndicated feed.)