America’s biggest banks have decided to deposit $30 billion in First Republic Bank to protect against another SVB-like collapse.
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First Republic Bank: The banking crisis in America has started deepening rapidly since last week. After the sinking of America’s Silicon Valley Bank and Signature Bank in the recent past, now First Republic Bank But the threat of closure is looming. America’s biggest banks pumped $30 billion into First Republic Bank to save it from another SVB-like collapse. During the last week, this special step has been taken to save the lender First Republic trapped in the crisis caused by the drowning of two American lenders.
A consortium of 11 US private banks including Bank of America, Citigroup and JPMorgan Chase has announced that they will deposit $30 billion in First Republic. The move reflects a ploy by lenders to shore up the system following the failures of three mid-sized lenders last week. A statement said that this action of America’s largest banks reflects their faith in the First Republic and banks of all sizes.
Let us tell you that after the sinking of Silicon Valley Bank last week, there was a decline in banking stocks globally. Due to which the market turmoil within a few days increased the crisis of Swiss lender Credit Suisse, forcing it to take a loan of $ 54 billion from the central bank of Switzerland to recover.
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How much money did these banks deposit
Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are each depositing $5 billion in First Republic, while Goldman and Morgan Stanley will each deposit $2.5 billion. A group of five other lenders, including PNC Bank and US Bank, are raising $1 billion each.
First Republic founder Jim Herbert and CEO Mike Roeffler said this collective support strengthens our position and is a great vote of confidence for First Republic and the entire American banking system. This action has been taken by the Federal Reserve and other US regulators to reassure all depositors of the two failed banks, Silicon Valley Bank and Signature Bank.
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The Fed gave a loan of $ 12 billion
The Fed says it has extended nearly $12 billion in loans to US banks under a one-year new lending program unveiled on Sunday, as officials took steps to ease stress on the financial system. At the same time, the central bank said that the total outstanding amount of all advances under the bank term funding program reached $ 11.9 billion by Wednesday. The Fed said it was providing additional funds “to help ensure that banks have the ability to meet the needs of all their depositors.”
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Fed’s balance sheet increased by $300 billion
With the seizure of SVB and Signature, an additional $142.8 billion was pumped into bridge banks created by regulators for the two collapsed banks, adding almost $300 billion to the Fed’s balance sheet in the past week. Last Friday’s SVB failure has raised concerns about a contagion effect, with concerns particularly keen that more banks could be run by depositors. The crisis has also escalated in Europe, with the Swiss Central Bank intervening to support Credit Suisse after coming under pressure.