Sunday, 16 June 2024

Investors’ concern continues despite intervention to save an ‎American bank

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Funding received by the American First Republic Bank, amounting to $ 30 billion, eased market fears of an imminent bank collapse today, Friday, but the decline in the troubled bank’s stock late Thursday night showed that investors are still concerned about sector turmoil.

According to “Reuters”, large American banks pumped financing into the San Francisco-based First Republic Bank on Thursday, after banks rushed to save the troubled bank, which became the latest affected in a widening banking crisis following the collapse of two medium-sized American banks during the past week.

According to a source, the bailout was coordinated by senior officials including Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and JPMorgan Chase CEO Jamie Dimon, who discussed the package this week.

The package came less than a day after Credit Suisse secured an emergency loan from the Swiss Central Bank of up to $54 billion to boost liquidity.

This support helped restore calm to global markets on Thursday and Friday after a tumultuous week for bank stocks

First Republic shares closed up 10 percent on the back of the bailout news, but fell 17 percent in after-market trading after the bank said it would suspend dividend payments and declined to disclose its cash position and the amount of emergency liquidity it needs.

Analysts believe that the authorities seem keen to deal quickly with systemic risks, but they are concerned that the possibility of a crisis in the banking sector still exists.

According to a statement, a number of the largest US banks participated in the rescue operation, including JPMorgan Chase & Co, Citigroup, Bank of America, Wells Fargo & Co, Goldman Sachs (NYSE:GS) and Morgan Stanley.

Although the support prevented an imminent collapse, investors were shocked by the late disclosures of the First Republic’s monetary position.

Data on Thursday showed that banks in the United States have sought record amounts of emergency liquidity from the Federal Reserve in recent days.

There are still broader concerns about the spread of infection.

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