• U.S. banks are facing financial contagion and liquidity issues following the collapse of Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank (SNBY).
• 11 lenders have deposited $30 billion into First Republic Bank’s coffers to prevent its collapse, demonstrating trust in the country’s banking system.
• FRC shares managed to recover on Thursday before the market closed, finishing 9.98% higher and gaining $3.11 per share.
The Impact of Recent Bank Failures
The recent failure of three major U.S. banks has caused a wave of financial contagion throughout the banking industry that has impacted institutions of all sizes, including giants like Bank of America and JPMorgan, whose stock values have declined as a result. Additionally, depositors removed $8.8 billion from Charles Schwab Corporation’s prime money market funds due to fears about the stability of other institutions in light of these collapses.
International Financial Institutions Affected
This event has not only impacted U.S.-based banks; Credit Suisse received a 50 billion Swiss franc bailout from the Swiss National Bank after SVB and SNBY depositors were bailed out by government agencies such as the Federal Reserve, Treasury, and FDIC in the United States.
First Republic Bank Gets Bailed Out
First Republic Bank (NYSE: FRC), a commercial bank and wealth management services provider founded in 1985, was also affected by this financial contagion: its stock value against the U.S dollar had decreased by 50% over five days prior to receiving a bailout from 11 lenders on Thursday – including big-name companies such as Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Goldman Sachs – who together deposited $30 billion into First Republic’s coffers to shore up liquidity and prevent collapse .
Outcome for First Republic
Following this injection of funds from outside sources , FRC shares saw an increase before closing on Thursday at 9 . 98 % higher than it had been prior , with an additional increase in value per share amounting to $ 3 . 11 . This is still lower than its August 1986 peak when each share was worth $10 , however it demonstrates some level of stability restored in light of recent events .
The injection of funds into First Republic after deposits were removed due to fear surrounding other institutions reflects confidence amongst leading banks in their own success despite tumultuous times for many businesses in finance today .