Eleven of the biggest US banks have come together to invest $30 billion (28 billion euros) to help regional First Republic Bank get out of trouble. That bank also threatened to fall prey to unrest in the banking sector.
Earlier this week, Silicon Valley Bank (SVB) collapsed because the bank was unable to refinance loans and raise additional cash through a share issue. Customers got worried and took out the money in bulk. The US government decided to take over the bank to guarantee all customer assets.
After that, banks not only in the US but also in Europe came under pressure. In the Netherlands, ING and ABN AMRO share prices fell sharply. In Switzerland, the country’s central bank has already intervened with 50 billion euros in loans to save Credit Suisse.
A smaller bank like SVB in the US state of California, First Republic Bank, also threatened to face problems. This bank also had many unsecured loans. On Thursday, the stock price initially fell more than 30 percent and trading in the bank’s shares was halted several times. After rumors of an imminent rescue, the rescue was of course.
On Thursday evening, the big banks, Morgan Stanley, Citigroup and Goldman Sachs (also known as the namesake of the 2008 banking crisis), along with eight other banks, announced that they were pulling their wallets and putting $30 billion into First Republic Bank.
Banks deposit between $1 and $5 billion each to give the ailing bank some breathing room. They promise to hold those credits for at least 120 days. It also includes the Federal Reserve (U.S. central bank) and the U.S. government.
“Passionate analyst. Thinker. Devoted twitter evangelist. Wannabe music specialist.”
More Stories
Bitcoin Falls in US on 'Stackflation Fears' – BLOX
'Service is more focused than ever in our industry'
Solar Magazine – China challenges US tax credit for electric cars and solar panels