First Republic Bank gets $30 billion lifeline after Credit Suisse, know how

It has been decided to provide $ 30 billion help to First Republic Bank, one of America’s largest banks. This decision has been taken to avoid a situation like Silicon Valley Bank.

First Republic Bank

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First Republic Bank: In America, the crisis of 3 banks within a week has increased the concern of the market. This is just a sign of the rapidly deepening banking sector crisis there. Silicon Valley Bank (Silicon Valley Bank) and Signature Bank (Signature Bank) now after the sinking of First Republic Bank But the danger of closure is looming, so 11 banks of America have come forward to save it.

11 big banks of America have made a huge investment of $30 billion in First Republic Bank to save it. Otherwise it would have been the third bank collapse in a week.

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Private sector banks came to the rescue

A group of 11 US private banks, including Bank of America, Citigroup and JPMorgan Chase, announced that they would infuse $30 billion in capital into First Republic Bank. This step has been taken to repair the system after the failures of 3 medium-sized banks last week. It has been said in a statement that this action of 11 big banks of America shows their faith in First Republic and all types of banks.

Let us tell you that last week, due to the sinking of Silicon Valley Bank, there was a decline in banking stocks globally. Due to this, a lot of ups and downs were seen in the market. At the same time, the crisis of Credit Suisse in Switzerland also increased the breath of the market. To overcome the crisis, he was forced to take a loan of $ 54 billion from the central bank of Switzerland.

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 Roffler said that this collective support will strengthen our position. This is a huge vote of confidence for the First Republic and the entire American banking system. This step has been taken at the behest of the Federal Reserve and other US regulators to restore confidence among common depositors after the collapse of Silicon Valley Bank and Signature Bank.

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Federal Reserve gave $ 12 billion

The Federal Reserve says it has launched a one-year new lending program on Sunday. Under this, loans of about $ 12 billion have been given to American banks. Steps have been taken to reduce stress on the financial system.

While the central bank says that the total outstanding amount of all advances under the bank term funding program reached $ 11.9 billion by Wednesday. On this, the Federal Reserve says that it is providing additional funds to the banks, so that the help of the banks can be ensured to meet all the needs of the depositors.

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Federal balance sheet increased by $ 300 billion

Apart from freezing the assets of SVB and Signature, the regulators had created bridge banks. An additional capital of $142.8 billion has been infused in these bridge banks. This increased the Federal Reserve’s balance sheet by nearly $300 billion in the past week.