First Citizens shares up 45% after buying Silicon Valley Bank
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Today, March 27, shares of the American banking holding First Citizens rose by 45%. Later they declined, but the price was still 22% higher than last Friday. This is how investors reacted to the news that First Citizens will buy Silicon Valley Bridge Bank is a sanatorium bank that received some of the assets and deposits of the bankrupt Silicon Valley Bank. First Citizens bought $72 billion worth of SVB assets at a $16.5 billion discount.
While some $90bn of the former SVB’s assets remain under the regulator’s control, markets reacted positively to the news, seeing it as a sign of the banking industry’s stabilization. According to experts, among other things, the increase on Monday by almost 6% of Deutsche Bank shares, which are strongly fell last week. The European banking index rose by 1.5%.
As Sanders Morris Harris CEO George Ball notes, Deutsche Bank is “finally strong financially,” with investors overreacting to bad news last week due to the bank’s past problems, and now its shares are rebounding. According to Russ Mould, chief investment officer of AJ Bell, “After the chaos of the last few weeks, bargain hunters have emerged in the European banking sector.” At the same time, he said, many investors are still trying to stay away from the banking sector, fearing further problems.
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