First Republic Bank continues to fly low despite financial aid
The ailing US bank First Republic will receive a support package worth 30 billion dollars. Nevertheless, the course of the regional bank falls significantly. Reza Darius Montasser explains why such measures fizzle out.
The next bank in the US is shaking: Several major banks are trying to support the First Republic institute from San Francisco and have brought deposits of 30 billion dollars into the bank – including JP Morgan Chase, Bank of America and Goldman Sachs.
EA group of major US banks wants to bail out troubled financial institution First Republic. The regional bank from San Francisco will be supported with uninsured deposits in the amount of 30 billion dollars (around 28 billion euros), the US authorities announced on Thursday during the opening of the US stock exchanges.
In doing so, in the midst of the recent turbulence, also around Credit Suisse, they wanted to send a signal that the US financial industry is ready quickly and with large sums of money to convey to savers and companies that their money is still safe with the banks and available at all times.
According to the authorities and the banks, eleven institutions are involved in the rescue: JP Morgan Chase, Wells Fargo, Goldman Sachs and Truist, Morgan Stanley, BNY Mellon, State Street, US Bank, PNC and Bank of America. The help was initiated by the banks.
After the collapse of Silicon Valley Bank and Signature Bank, there was concern that the mid-sized First Republic could be next. It has a similar clientele as the start-up financier Silicon Valley Bank. Customers withdrew their money and the stock price plummeted.
The news about the planned rescue package caused the share to rise again significantly on Thursday, after having previously lost up to 36 percent in value.
US regulators and the Treasury Department said tonight they welcomed the banks’ decision to help the First Republic. This shows the resilience of the US banking system, said Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and other senior financial officials in a statement.
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