Large U.S. banks injected $30 billion in deposits into First Republic Bank, swooping in to rescue the lender caught up in a widening crisis triggered by the collapse of two other mid-size U.S. lenders over the past week. | Reuters
Some of the biggest U.S. banking names including JPMorgan Chase & Co, Citigroup Inc, Bank of America Corp, Wells Fargo & Co, Goldman Sachs and Morgan Stanley were involved in the rescue, according to a statement from the banks.
A round of financing on Sunday raised through JPMorgan had given First Republic access to $70 billion in funds. But that failed to calm investors as worries of a contagion deepened with the demise of Signature Bank to follow that of SVB and depositors began moving cash to larger lenders. However, the European Central Bank raised interest rates by 50 basis points on Thursday as flagged, stressing the resilience of the euro area banking sector while assuring it had plenty of tools to offer liquidity support if needed.The U.S. Federal Reserve is expected to follow the ECB move at its next meeting with a quarter-point interest-rate hike that just days ago looked derailed by turmoil in the banking sector.
“The numbers, as we see them right here, are more consistent with the idea that this is just an idiosyncratic issue at a handful of banks,” said Thomas Simons, money market economist with investment bank Jefferies. It said it would exercise an option to borrow up to 50 billion Swiss francs from the Swiss National Bank, which confirmed it would provide liquidity to the bank against sufficient collateral.
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