Big U.S. banks join forces to bail out First Republic Bank with $30 billion
A group of U.S. financial institutions have joined forces to bail out First Republic Bank with up to $30 billion. and have decided to announce the measure this Thursday, according to several specialized media. JPMorgan and Bank of America, the two largest U.S. banks, will deposit $5 billion each in First Republic, according to The New York Times (NYT). The same amount would be put up by Citigroup, according to The Wall Street Journal.
For its part, Goldman Sachs and Morgan Stanley are expected to contribute $2.5 billion each.if the deal is completed and that a smaller group of regional banks could contribute $1 billion each as part of the total, the NYT detailed. Following this media leak, First Republic shares were up 5.31%, as of 15.00 local time (19.00 GMT), a sharp contrast to the nearly 30% drop earlier in the morning.
First Republic Had the third highest uninsured deposit rate among U.S. banks.behind Silicon Valley Bank (SVB) and Signature Bank, according to a Raymond James note. First Republic, which is based in San Francisco, was downgraded to junk status on Wednesday by both Fitch Ratings and S&P Global.
With this movement First Republic is prevented from going the way of Silicon Valley Banky and Signature Bank.The closure of these institutions by the authorities on the 10th and 12th respectively, in a move that triggered a wave of panic that then spread to Europe.
“This show of support from a group of major banks is very much appreciated, and demonstrates the resilience of the banking system“The 11 banks, which include giants such as JPMorgan and Bank of America – the largest in the country – announced the agreement. The 11 banks, which include giants such as JPMorgan and Bank of America – the largest in the country – announced the agreement, which prevents First Republic from following the path of Silicon Valley Bank and Signature Bank, entities closed by the authorities on Friday and Sunday, respectively.
The bankruptcy of these firms unleashed a current of panic that then spread to Europe.The bankruptcy of these firms has forced the US authorities to make clear their confidence in the banking system, assuring that the situation is very different from what happened in 2008 with the economic crisis. This Thursday, the Treasury Secretary herself, Janet Yellen, assured in an appearance before legislators that the sector “is solid” and that citizens can trust that their deposits are insured.