It’s amazing how circumstances can change so quickly. SVB Financial Group (NASDAQ:SIVB) subsidiary Silicon Valley Bank is the poster child of bank failures, but the company’s story definitely isn’t over yet. At the same time, SIVB stock is about to lose its status as a listed asset on the Nasdaq exchange.
Like it or not, bailouts and backstops have become part of America’s banking culture. This has been true since the U.S. government provided financial support to big banks during the 2008-2009 financial crisis, Yet, investors shouldn’t make assumptions about the current situation. Federal lawmakers and regulators are in no mood to bail Silicon Valley Bank out with taxpayer money.
But sometimes the banking sector has a way of fixing its own problems. As successful companies take over less successful ones, Silicon Valley Bank just might get rescued in the end — but we might not be able to say the same thing about SIVB stock.
Silicon Valley Bank Gets a Lifeline
Lately, commentators seem to be more interested in the domino effect on other banks than the possibility of a resurrection of Silicon Valley Bank. Yet, investors shouldn’t dismiss Silicon Valley Bank out of hand. It has name recognition among some wealthy clients on the U.S. West Coast.
And now, Silicon Valley Bank just received a lifeline through a “deal it couldn’t refuse.” Reportedly, First Citizens Bank (NASDAQ:FCNCA) is buying Silicon Valley Bank from the Federal Deposit Insurance Corporation (FDIC) for $500 million worth of First Citizens shares.
Evidently, First Citizens is set to acquire $72 billion of Silicon Valley Bank’s assets at a $16.5 billion discount. So, the deal sounds like a win-win for all parties involved — including, notably, anyone invested in Silicon Valley Bank.
Get Ready for March 28: SIVB Stock Is Getting Delisted
There’s a new wrinkle to the ongoing story of SVB Financial Group and Silicon Valley Bank. It appears that the Nasdaq exchange is going to suspend SIVB shares tomorrow and officially delist them. Among other considerations, Nasdaq cited “concerns about the Company’s ability to sustain compliance with all requirements for continued listing” on the exchange.
Reportedly, SVB Financial Group doesn’t intend to appeal Nasdaq’s decision. The next steps are unclear at the moment. It’s possible that SVB Financial Group could be listed on the over the counter markets.
Yet, many traders would probably view this as a downgrade from the Nasdaq. Ultimately, it’s an unfortunate development for SVB Financial Group’s shareholders, even while Silicon Valley Bank’s customers can celebrate the corporate takeover news.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.