First Republic 9.98%… managed to rebound
The 3 major indices on the New York Stock Exchange rose, Nasdaq 2.48% ↑
All-out war between the public and private sectors to ease financial instability
Eleven U.S. banks offered a helping hand to the First Republic Bank, which suffered from fear of a bank run. A total of 30 billion dollars (39 trillion won) was urgently injected to ease the anxiety of depositors and the market.
On the 16th (local time), the U.S. Treasury Department, the Federal Reserve System (Fed), and the Federal Deposit Insurance Corporation (FDIC) issued a joint statement and announced that “11 banks will deposit a total of $30 billion at First Republic Bank.” Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and FDIC Chair Martin Gruenberg said in a statement, “We welcome this support from the big banks. It shows the resilience of the US banking system.” The 11 banks include JP Morgan, Citi, Bank of America and Wells Fargo. Included were PNC, Truist, and Bank of New York Mellon.
San Francisco-based First Republic Bank, like Silicon Valley Bank (SVB), which went bankrupt last week, has deposits of more than $250,000 (330 million won), which is the deposit protection standard, as high as about 70% of total deposits, as well as high western and eastern bank deposits. It has been operating for a specific group centered on codes. For this reason, it was pointed out that US banks are vulnerable to bank runs like SVB even though they are large banks, ranking 14th with 213 billion dollars (280 trillion won) as of the end of last year. As a result, on the 13th, it has walked narrowly between amplifying anxiety and calming down by 61.9% a day.
On the 16th, shares of First Republic Bank plunged more than 25% in the early hours of the market on the 16th as fears spread due to the liquidity crisis in Credit Suisse, a large Swiss investment bank. However, in the morning, the Wall Street Journal (WSJ) turned upward on the news that large banks on Wall Street, such as JP Morgan Chase and Morgan Stanley, were discussing liquidity support. The stock closed the day with a 10.3% increase.
As 11 U.S. banks started to bail out the First Republic bank, fears eased, and the Nasdaq index closed at 11,717.28, up 2.48 percent on the day. The Dow Jones Industrial Average closed at 32,246.55, up 371.98 points (1.17%), and the Standard & Poor’s (S&P) 500 Index rose 1.76% to 3960.28.
The U.S. financial authorities, which initially imposed firm closures on SVB and Signature Bank, are known to have encouraged major banks to support the First Republic’s rescue. Despite the full deposit guarantee measures and the Fed’s announcement of liquidity support, it seems that they are actively seeking relief as the sense of crisis in CS from Europe spreads. “This unprecedented private sector partnership is a powerful step to bolster liquidity and reflects confidence in the vital role of local banks in our economy and across the communities we serve,” Truist CEO Bill Rogers said in a statement. ”he said.
New York =
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.