CNBC Daily Open: First Citizens struck a great bargain

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

• As part of the deal, First Citizens will buy SVB assets worth $72 billion at a $16.5 billion discount. Additionally, the Federal Deposit Insurance Corporation will share losses on SVB’s commercial loans and provide a credit line to First Citizens. Investors liked the bargain First Citizens struck — its shares skyrocketed a staggering 53.74% on the news. That’s a jump from $582.55 to $894.61.

• The Dow Jones Industrial Average and S&P 500 rose Monday as regional banks rallied on improved sentiment. First Republic jumped 11.81%, KeyCorp added 5.31% and PacWest increased 3.46%. Likewise, bank stocks in Europe rose 1.4% — Deutsche Bank, in particular, climbed 6.29% — helping the pan-European Stoxx 600 index close 1.1% higher.

• Jack Ma, founder of Alibaba, has been spotted in China after spending months out of the country. Analysts think it’s a sign Beijing’s loosening its grip on the technology sector in its pursuit of economic growth this year.

• PRO Jeremy Siegel, professor at the Wharton School, said the Federal Reserve “basically beat inflation late last year,” citing these indicators.  

First Citizens’ purchase of SVB’s assets was a bargain in monetary terms. More crucially, it signaled to markets that, despite SVB’s financial difficulties, there was still value in SVB’s reputation and relationship with its clients. There’s hope, then, of reviving a dead bank — something that can happen only in an environment conducive to such miraculous feats.

Another troubled bank, First Republic, rallied after it was reported that U.S. authorities were considering giving the bank more time to shore up its liquidity. It might not need much more time, not only thanks to the $30 billion deposit promised to it by a coalition of banks, but also because the outflow of deposits from smaller banks to larger institutions has slowed in recent days, as sources told CNBC’s Hugh Son.

And beleaguered KeyCorp, which tanked about 60% since the start of the banking turmoil, has a chance of surging 68.6%, according to Citi, which upgraded KeyCorp to buy from neutral.

The optimism was reflected in the SPDR S&P Regional Banking ETF (KRE), which rose about 0.87%. Major indexes — with the exception of the Nasdaq Composite (more on that in a moment) — closed the day in the green too. The Dow increased 0.6% and the S&P inched up 0.2%. The Nasdaq Composite, however, fell 0.5%.

Technology shares, which posted sterling gains as banks struggled the past two weeks, are now facing difficulties of their own. Alphabet slid 2.83%, Apple lost 2.8% and Meta fell 1.5%. Charles Schwab’s Liz Ann Sonders noted the S&P 500 information technology sector’s valuation, relative to the performance of the companies, has risen more than 30%. That’s not a sign we’re back in the pandemic days of sky-high tech valuation, but it’s something to keep an eye on as the banking crisis (hopefully) gets contained.

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Correction: This article has been updated to reflect that First Citizens is buying SVB assets at a discount of $16.5 billion. An earlier version of this report misstated the purchase price.