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> Some SVB customers told the Journal they have asked First Citizens if their loans can be set off with the deposits that the funds had in their Cayman bank acc
by imustbeevil 3y ago
> Some SVB customers told the Journal they have asked First Citizens if their loans can be set off with the deposits that the funds had in their Cayman bank accounts.
> In response to a query from the Journal, a First Citizens spokeswoman said a setoff “isn’t legally possible in this situation,” because First Citizens owns the capital-call lines while the Cayman deposits were with SVB Financial Group, the former holding company of Silicon Valley Bank.
https://archive.is/1d4uw#selection-353.0-357.287 https://archive.is/1d4uw#selection-353.0-357.287 (paywall passthrough for original article)
Presumably these loans were offloaded before the insolvency hit.
- s1artibartfast 3y ago>Presumably these loans were offloaded before the insolvency hit No, that isnt what it is saying here. The loans weren't offloaded beforehand. First citizens obtained them as a result of the insolvency. First Citizens is claiming that they dont have to perform setoffs for some of the loans they acquired. First citizens did perform setoffs for other unsecured customers in US branches, similar to how I described in my posts above, as required by law. Customers with accounts AND loans get their loans forgiven before the account balance goes to FDIC insured accounts. However, First Citizens thinks that due to the structure of their purchase and the SVB organization, they are not obligated to do the same for international branch customers with accounts and loans. For those, they get to hold the loan but not the setoff obligation. Now the FDIC is in the position where they have to decide if they will claw back the loans from First Citizens and forgive them directly.