The largest banks in the United States on Thursday moved to rescue the First Republic, easing growing fears that the regional lender may be next to fall after some recent collapses which include Silicon Valley Bank.
A group of 11 private banks in the United States, which include Citigroup, JPMorgan Chase and Bank of America, announced that $30 billion will be deposited by them into the First Republic.
The step marks a dramatic initiative by the lenders to support the system after the failures of three lenders in the last week.
“This action by America’s largest banks reflects their confidence in the First Republic and in banks of all sizes,” stated the group, in a joint statement.
“Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most,” the banks added.
“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” stated leaders of the Federal Deposit Insurance Corporation, US Federal Reserve, Treasury Department and Office of the Comptroller of the Currency in a joint statement.
JPMorgan Chase, Bank of America, Wells Fargo and Citigroup each are making an uninsured deposit of $5 billion in the First Republic, while Morgan Stanley and Goldman will pump in $2.5 billion each.
Another group of five lenders, which include US Bank and PNC Bank, will each allot $1 billion.
First Republic founder Jim Herbert and CEO Mike Roffler, in a statement, said the “collective support strengthens our liquidity position… and is a vote of confidence for First Republic and the entire US banking system.”
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Meanwhile, US banks were lent nearly $12 billion by the Federal Reserve under a new one-year lending programme announced on Sunday, as steps were taken by the authorities to relax stress on the financial system after the collapse of Silicon Valley Bank.
Under the Bank Term Funding Programme, the total outstanding amount of all advances reached $11.9 billion by Wednesday, said the US central bank in a statement on Thursday.
(With inputs from agencies)
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