The crisis-ridden US bank First Republic receives a cash injection of 30 billion dollars (around 28 billion euros) from eleven major banks. "This action by America's largest banks reflects their confidence in First Republic and banks of all sizes," the financial institutions, including Bank of America, Citigroup and JPMorgan Chase, said on Thursday. The joint approach also shows the confidence of the big banks "in the country's banking system".
On Wall Street, prices have recovered after positive signals from the banking sector, which has recently been under pressure. The Dow Jones index of standard stocks closed on Thursday after a weak start with a plus of 1.2 percent and came to 32,246 points. The broader S&P 500 gained 1.8 percent to 3960 positions. The technology-heavy Nasdaq advanced 2.5 percent to 11,717 points.
Bank shares rise
Investors were confident that a total of eleven banks would step in with the ailing regional bank First Republic. As a result, bank shares rose again. JP Morgan and Morgan Stanley each rose about 1.9 percent, while First Republic Bank closed ten percent higher. The positive mood also spread to other regional banks.
The Swiss National Bank's support for Credit Suisse also contributed to the good mood. U.S.-listed stocks rose after the announcement of loans of up to $54 billion to boost Credit Suisse's liquidity and investor confidence.
"Regional, medium-sized and small banks are central to the health and functioning of our financial system," the banks added in a joint press release. The big banks are now using their "financial strength and liquidity" where it is most needed.
The banks Citigroup, Bank of America, JPMorgan Chase and Wells Fargo make uninsured deposits of five billion dollars each at First Republic Bank. $2.5 billion each comes from Goldman Sachs and Morgan Stanley. BNY Mellon, PNC Bank, State Street, Truist and U.S. Bank are each providing one billion dollars.
Slipped into crisis due to SVB bankruptcy
The San Francisco-based regional bank First Republic was in trouble in the wake of the collapse of Silicon Valley Bank (SVB). The bank's stock has lost massive value since the middle of last week. Media reports about a possible billion-euro injection caused the share price of the financial institution to skyrocket on Thursday.
The collapse of SVB – the largest bank failure in the US since the 2008 financial crisis – has caused significant turbulence in the US and internationally, causing difficulties for a number of banks. The Californian bank, which is mainly active in the technology sector, collapsed last week after a massive withdrawal of customer deposits.
"Our banking system is sound"
As a result, the New York-based Signature Bank had to be shut down. The US government intervened vigorously and, among other things, promised a guarantee of all customer deposits with the two banks.
Treasury Secretary Janet Yellen tried again on Thursday to reassure the public. "Our banking system is sound, and Americans can rest assured that their deposits will be there when they need them," Yellen said at a hearing before the Senate Finance Committee. The U.S. government has taken "decisive and vigorous action to stabilize and strengthen public confidence in our banking system."