Bank stocks rally after Silicon Valley bank bailout deal

Bank stocks rallied yesterday after parts of the collapsed Silicon Valley Bank were bought by a US regional lender.

The deal with North Carolina’s First Citizens eased concerns about the broader sector, which is experiencing its biggest shock since the 2008 financial crisis.

Reports that US authorities are considering more support for troubled lenders also whetted investor appetite after weeks of turmoil.

The collapse of the SVB and two smaller American lenders had triggered global shocks that led to the demise of the 167-year-old Credit Suisse.

Epicenter: The collapse of SVB and two smaller American lenders had triggered global shocks that led to the demise of 167-year-old Credit Suisse

SVB’s UK arm has already been saved by a £1 emergency takeover by HSBC.

Concerns have also spread to US regional banks and First Republic in particular. However, its shares rose 10.5 percent yesterday, while other regional lenders like Keycorp and Zions also posted gains, as did bigger names like JP Morgan and Citigroup. First Citizens was up 22 percent.

In Europe, Deutsche Bank – which fell 8.5 percent on Friday as fears spread over the European banking sector – rose 6 percent yesterday.

British banks were also among the frontrunners, with Barclays up 2.3 percent, NatWest up 0.5 percent, HSBC up 1.3 percent and Lloyds up 1.3 percent.

The deal for SVB sees First Citizens taking over £90bn in assets, £46bn in deposits and a £59bn loan book, as well as its 17 branches.

The SVB was acquired by the Federal Deposit Insurance Corporation (FDIC) earlier this month after a bank run that saw billions of dollars siphoned off by depositors.