Swarajya Logo
Swarajya Logo
Politics States Economy Society Business Culture Infra Defence World Books Ideas Science Technology Heritage Archives Legal Movies Sports
  • Our Views
    Politics States Economy Society Business Culture Infra Defence World Books Ideas Science Technology Heritage Archives Legal Movies Sports
  • Magazine
  • Store

About Swarajya

Swarajya is a publication by Kovai Media Private Limited.

Swarajya - a big tent for liberal right of centre discourse that reaches out, engages and caters to the new India.

editor@swarajyamag.com

Useful Links

  • About Us
  • Subscriptions Support
  • Editorial Philosophy
  • Press Kit
  • Privacy Policy
  • Terms of Use
  • Code of Conduct
  • Plagiarism Policy
  • Refund & Cancellation Policy

Useful Links

  • About Us
  • Subscriptions Support
  • Editorial Philosophy
  • Press Kit
  • Privacy Policy
  • Terms of Use
  • Code of Conduct
  • Plagiarism Policy
  • Refund & Cancellation Policy

Participate

  • Contact Us
  • Write for us
  • Style Guide
  • Jobs

Stay Connected

  • Artboard 2 Copy 6Created with Sketch.
    Artboard 2 Copy 10Created with Sketch.
    Artboard 2 Copy 7Created with Sketch.
    Artboard 2 Copy 9Created with Sketch.
  • Andriod Logo
  • IOS Logo

World

US Banks Pool $30 Billion To Support First Republic Amid Banking Crisis

Swarajya StaffFriday, March 17, 2023 12:05 pm IST
A 'First Republic Bank' branch (Representative image)
A 'First Republic Bank' branch (Representative image)
A 'First Republic Bank' branch (Representative image)

US banks pooled $30 billion to support First Republic Bank and to limit the impact of recent collapses of two major lending institutions.

First Republic, a California lender, will receive $5 billion deposits from JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, while Goldman Sachs and Morgan Stanley will deposit $2.5 billion each. BNY Mellon, PNC Bank, State Street, Truist, and US Bank will deposit $1 billion each.

On Thursday (16 March), America's largest banks expressed confidence in the country's banking system and announced their commitment to deploying financial strength and liquidity where it is needed most.

Uncertainty remains on whether the step taken will reestablish trust in First Republic and the overall banking industry. Despite Thursday's recovery, First Republic's stocks have fallen over 20 per cent in post-market trading.

The bank's stock decreased following the announcement of dividend suspension and plans to reduce borrowings along with the size and structure of its operations during a period of uncertainty.

Ackman tweeted that the effort to support First Republic was a "fictional" show of confidence and blamed it for spreading default risk to major banks.

US banks sought help from the Federal Reserve after the collapse of SVB. The Fed provided support, lending $160 billion in the week ending 15 March through its discount window and emergency facility, indicating wider problems in the banking industry.

On Thursday (16 March), data from the Fed indicated that there was a record high usage of the discount window, reaching $152.85 billion in just five days, ending on Wednesday (15 March). This surge was due to the emergency measures announced on Sunday (12 March), whereby the terms of the facility were relaxed for banks.

Borrowers took $11.9 billion from the Fed's Bank Term Funding Program and $142.8 billion was given to guarantee deposits at SVB and Signature Bank, according to recent reports.

The government urged banks to assist First Republic, as its debt rating dropped and shares took a hit after the collapse of Silicon Valley Bank, per an involved party.

First Republic's lifeline resembled the 1998 Long-Term Capital Management bailout, with the New York Fed organizing a $3.6 billion rescue package for the hedge fund, including funds from major Wall Street creditors.

US Treasury Secretary Janet Yellen, Federal Reserve Chair Jay Powell, and other regulators welcomed the group of large banks’ support, describing it as a demonstration of the banking system’s resilience.

The Fed is prepared to offer eligible institutions liquidity through the discount window, as usual.

First Republic's shares shot up by over 10 per cent after the announcement, as they had been down by 64 per cent since the Federal Deposit Insurance Corporation took over SVB, causing concerns of the contagion's spread to other regional lenders.

The bank received $70 billion in unused liquidity from the Fed and JPMorgan on Sunday (12 March) to improve its financial position, not counting the funds available through the new federal Bank Term Funding Program.

Moody's put First Republic's long-term ratings on watch for a downgrade due to its dependence on uninsured deposits and suffered losses on held-to-maturity securities. The bank faced a credit rating cut by Fitch and S&P Global on the following day.

Also Read: SVB Collapse Shows US Monetary And Fiscal Goof-Ups Have Costs For World, Benefits For US

Tags
US Federal Reserve
JP Morgan
US Treasury
Federal Deposit Insurance Corporation
Fed data
Silicon Valley Collapse
First Republic

Comments ↓

An Appeal...


 

Dear Reader,

 

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

 

Our business model is you and your subscription.  And in challenging times like these, we need your support now more than ever.

 

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

 

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Get Swarajya in your inbox.


Magazine


Swarajya Magazine Cover Image
Merchandise

Merchandise


    Politics

    Exit Poll: Close Contest In Telangana, Chhattisgarh, Mizoram; Axis-My India Prediction Outlier For Rajasthan, Madhya Pradesh

    Exit Poll: Close Contest In Telangana, Chhattisgarh, Mizoram; Axis-My India Prediction Outlier For Rajasthan, Madhya Pradesh

    Nishtha Anushree
    4h

    Madhya Pradesh: Axis-My India Predicts Huge Victory For BJP As Other Exit Polls Suggest Close Contest With Congress

    Swarajya Staff
    4h

    Rajasthan Exit Poll: Axis-My India Predicts More Seats For Congress, Contrary To Other Surveys Giving Majority To BJP

    Nishtha Anushree
    5h

    Economy

    India's GDP Grows 7.6 Per Cent In July-September Quarter

    India's GDP Grows 7.6 Per Cent In July-September Quarter

    Nayan Dwivedi
    5h

    India's Fiscal Deficit Stood At Rs 8.037 Lakh Crore In First Seven Months Of Fiscal Year

    Swarajya News Staff
    6h

    India's Oil Imports From Russia Surge In November, Rebounding From Maintenance Slump: Kpler And Vortex Data

    Bhuvan Krishna
    6h

    Defence

    In One Of The Largest-Ever Deals, Defence Ministry Clears Purchase Of 97 Tejas Fighters And 156 Prachand Combat Helicopters For IAF

    In One Of The Largest-Ever Deals, Defence Ministry Clears Purchase Of 97 Tejas Fighters And 156 Prachand Combat Helicopters For IAF

    Ujjwal Shrotryia
    6h

    As India Mulls Renaming IAF To 'Air And Space Force,' Tata Forays Into Manufacturing High-Resolution Military Satellites

    Ujjwal Shrotryia
    10h

    Indian Navy's Ships Get Indigenous Firepower Boost: MoD Inks Contract Worth Rs 2,956 Crore For 16 Super Rapid Guns

    Ujjwal Shrotryia
    1d

    World

    COP28: Wealthy Nations Launch 'Loss And Damage' Fund To Help Vulnerable Countries Cope With Natural Disasters

    COP28: Wealthy Nations Launch 'Loss And Damage' Fund To Help Vulnerable Countries Cope With Natural Disasters

    Nishtha Anushree
    4h

    Rebellion In Biden Administration Over Israel Policy: CIA Official Posts "Free Palestine", No Punishment But 'Listening Sessions'

    Nishtha Anushree
    7h

    China Mourns Death Of Henry Kissinger, Crediting Him For Ending Mao-era Isolation

    Swarajya Staff
    9h

    Culture

    Kashi Tamil Sangamam 2023 To Be Held From 17 December To 30 December, Registration Portal Launched By IIT Madras

    Kashi Tamil Sangamam 2023 To Be Held From 17 December To 30 December, Registration Portal Launched By IIT Madras

    S Rajesh
    1d

    M P N Ponnusamy: A Nagaswara Legend Passes Away Almost Unsung

    K Balakumar
    2d

    Streamlined Repatriation: India-US Deal To Fast-Track Return Of Stolen Antiquities

    Swarajya Staff
    3d
    States

    infrastructure


    V Bhagya Subhashini
    1

    Kolkata Metro: India's First Underwater Metro To Be Operational Soon

    3 Mins Read
    V Bhagya Subhashini
    2

    Navi Mumbai Metro Lines 2, 3, and 4 DPR To Be Ready In Two Months

    2 Mins Read
    Amit Mishra
    3

    Deputy CM Ajit Pawar Emphasizes Urgency As Lack of Clearances Delays Revas-Reddi Coastal Road Project

    2 Mins Read
    Amit Mishra
    4

    JSW Infra Inks Pact With Karnataka Government For Rs 4,119 Crore Keni Port Project

    2 Mins Read