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Another U.S. bank at risk of collapse, top banks start to scramble

  • International
  • Lead News
  • 17 March, 2023 11:44:13

Photo: Collected

International Desk: After Silicon Valley Bank (SVB), Signature Bank of the United States has gone bankrupt. And this time another US bank called First Republic is in danger of collapse. And because of this, the top US banks have started to struggle. Due to the fear of collapse, the top banks have deposited 30 billion US dollars in First Republic Bank as an advance warning. In a report on Friday (March 17), the news agency AFP and the BBC reported this information. According to the report, the US authorities are trying to calm the panic about the banking system after one bank collapse in the United States. Besides, the concern about this sector has spread globally and that has created the fear of crisis. Basically two consecutive bank closures have created panic in the US banking sector.

The White House, including the US regulatory agencies, has started monitoring other banks. Earlier, several news agencies reported that the White House is now monitoring small and regional banks, including First Republic Bank. And in the meantime, news of top US banks depositing $30 billion in First Republic Bank in fear of collapse. AFP said, a consortium of 11 US private banks, including Bank of America, Citigroup and JPMorgan Chase, announced to deposit $30 billion in First Republic Bank. . Banks will deposit this money without any guarantee clause or insurance. Besides, Goldman Sachs and Morgan Stanley will deposit 2.5 billion dollars in the bank. In addition, State Street, PNC Bank, Truist, BNY-Mellon banks will also deposit $1 billion in First Republic Bank. The group said in a joint statement, "This move by America's largest banks reflects their confidence in banks of all sizes, including First Republic Bank." Together we are bringing our larger systems, financial strength and liquidity to where it is needed most.' Meanwhile, in a joint statement, the leaders of the US Treasury Department, the US Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency said, "This support from the big banks is sincerely welcome. This initiative of theirs shows the resilience of the US banking system.

It should be noted that Silicon Valley Bank (SVB), the top commercial bank in the US, has recently closed. In just 48 hours, the bank was completely closed. The main reason was rumours. Before the bank closed, it was suddenly heard that Silicon Valley Bank was suffering from serious financial deficits. The deficit is so large that at least $225 million is needed to shore up the bank's balance sheet. As soon as this rumor spread, Silicon Valley Bank's customers began to withdraw money. Incidentally, in 2008, a massive recession began in the United States. At that time, many small and big banks of the country went bankrupt one after another. After 15 years of that recession situation, this is the first time that such a situation of a leading bank has happened in the United States. However, the danger is not over yet, it is understood by looking at the actions of the leading US banks regarding the First Republic Bank.

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