the american bank First Citizens buys most of the assets of the Silicon Valley Bank (SVB)whose bankruptcy this month caused a wave of panic in the banking sector in the United States and Europe.

First citizens buys “all deposits and loans” from the SVBAnd “all 17 SVB branches will open as First CitizensThat same Monday, the Federal Deposit Insurance Corporation (FDIC) of the United States announced Sunday evening.

The transaction includes the sale of $72,000 million in assets at a discount of $16,500 millionthe bank regulator said in a statement.

In addition, at the time of its bankruptcy on March 10, SVB had $119 billion in deposits, according to the FDIC. SVB depositors “automatically become First Citizens Bank depositors”, according to the regulator.

Loans and deposits will thus be managed by First Citizens, while the FDIC will hold about $90 billion in securities and “other assets.” Finally, the North American Deposit Guarantee Mechanism, administered by the FDIC, will absorb $20,000 million in losses.

Silicon Valley Bank: why the US bank collapsed (and what the US Federal Reserve bailing out its clients means)

A sector under pressure

The fall of SVB, which specializes in technology companies, meant the largest bank failure in the United States since 2008and destabilized the banking sector in a way that reminded many of the global financial crisis that began that year.

SVB found itself in a critical situation after announcing the sale of $21,000 million in financial securities, with losses of $1,800 million, and the intention to raise its capital.

The announcement generated a massive cash withdrawal that led to the competent authority declaring the company insolvent on March 10 and taking control. On March 13, the bank reopened as Silicon Valley Bank Bridge with a manager tasked with finding a solution.

One of the factors that caused the bankruptcy was the US Federal Reserve’s rapid rate hike to curb inflation.

This interest rate increase was the result in an impairment of the US Treasury bond portfolio held by the SVBand whose value fluctuates in the opposite direction to the rates.

The interest rate hike also increased the cost of borrowing, forcing SVB client companies to allocate more money to service debt.

At the same time as SVB, two other banks in the United States went bankrupt, Signature Bank and Silvergate, and several regional entities suffered in the stock market. The unrest spread to Europe, with major losses in the banking sector.

First Citizens lost exactly 23% of its value on the stock exchange since the beginning of January. Another entity that came under pressure, regional bank First Republic, lost 80% of its value within days.

Last week, the FDIC announced a similar agreement to purchase a portion of Signature Bank by Flagstar Bank, a subsidiary of New York Community Bancorp.

Flagstar absorbed Signature’s 40 branches and most of $88.6 billion in deposits. But some $60,000 million in loans remains under the control of authorities.