11 Banks Pour $30 billion to Avoid Another SVB Like Collapse
NEW YORK: US’ largest banks on Thursday moved to shore up First Bank amidst lingering fears that regional lenders could be the next domino to collapse likewise the SVB. Around $30 billion have been injected into First Bank.
“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, Federal Deposit Insurance Corporation Chairman Martin Gruenberg, and Acting Comptroller of the Currency Michael Hsu said in the statement.
The 11 banks that poured out fresh cash included JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. that will contribute $5 billion of uninsured deposits each, while Goldman Sachs Group Inc. and Morgan Stanley will kick in $2.5 billion apiece, according to a statement Thursday. PNC Financial Services Group Inc., Bank of New York Mellon Corp., Trust Financial Corp., U.S. Bancorp and State Street Corp. amongst others will put in $1 billion each.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes,” the banks said in their statement. The consortium cited the outflows of uninsured deposits at a small number of banks following the collapse of Silicon Valley Bank and Signature Bank.
First Bank has been exploring strategies to including a possible sale to bolster the system following failures of three midsized lenders in the last week. The deal began to take shape Tuesday and came together in about two days, with the idea of bringing the banks on board broached during a call that included the likes of JP Morgan and others.
Shares of First Bank on reversed earlier loses to close 10 per cent higher on Thursday.