Financial crisis: rescue of the SVB brought relief in the US and in the European stock markets

Global stocks rose on Monday, after First Citizens BancShares will reassure the fragile markets by saying that it will assume the bankrupt’s deposits and loans Silicon Valley Bank. The agreement offered the markets some respite after several weeks of new bank collapses, bailouts or emergency aid from the authorities.

First Citizens BancShares Inc purchased all of SVB’s loans and deposits and gave to the United States Federal Deposit Insurance Corporation (FDIC) stock appreciation rights of up to 500 million dollars in exchangethe FDIC said in a statement.

Seventeen former SVB branches will open as First Citizens branches on Monday. This entity buys about $72 billion of SVB assets at a discount of $16.5 billion, and the estimated cost of the SVB collapse to the FDIC’s deposit insurance fund is about $20 billion, according to the FDIC.

North Carolina-based First Citizens said in a statement that it did not buy other assets or debt from SVB Financial Group, the former parent of Silicon Valley Bank. “Silicon Valley goes to another buyer, which is good, but the bigger problem is guaranteeing the deposits of all the other (regional) banks,” said Tony Sycamore, an analyst at IG Markets in Sydney. “It’s a bit of calm before the next storm”, added.

What happened in Europe?

European stocks rose on Monday as markets calmed down after a turbulent week on concerns over the stability of the banking sector after the bankruptcy of Credit Suisse and two midsize US lenders.

The pan-European STOXX 600 index gained 1.1%, as investors were reassured by the news that First Citizens BancShares Inc will acquire Silicon Valley Bank’s deposits and loans.

European banks advanced 1.4% after losing 3.8% on Friday when Deutsche Bank sent the sector tumbling. Shares of the German entity rose 6.2% after falling 8.5% on Friday.

Shares of Swiss bank UBS, which Credit Suisse acquired in a bailout deal last week, rose 1.1%. Credit Suisse advanced 0.5%as the Swiss financial regulator FINMA said at the weekend that it is considering taking disciplinary action against the institution.

“Many investors still do not want to touch the banking sector for fear of more difficulties”said Russ Mold of AJ Bell. “However, for every bleak situation, there is always someone who sees an opportunity to make money, which is why today we are seeing the share price of many European banks rise.”

The values ​​of the health sector were the ones that rose the most in Europe, 1.9%. Swiss drugmaker Novartis jumped 7.7% after saying its breast cancer drug Kisqali had been shown to reduce the risk of recurrence in women diagnosed at an early stage.

The European stock markets are preparing to close the first quarter of the year with gains, buoyed by signs of economic resilience and hopes that central banks are nearing the end of their tightening cycles. However, European banks will end the quarter almost flat amid the turmoil in the banking sector.