a First Republic Bank’s $30 billion lifeline eased market fears of an imminent bank failure on Friday, but a late sell-off in shares of troubled US lenders sent investors still worried about a crack in the sector. have indicated that they are concerned about
A major U.S. bank on Thursday injected funds into a San Francisco-based bank, threatening lenders embroiled in a widening crisis caused by the failures of two other medium-sized U.S. lenders over the past week. I rushed in to save her.
The deal was made by leading brokers including U.S. Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and JPMorgan Chase & Co. CEO Jamie Dimon, according to sources familiar with the matter. It was put together and we discussed the package this week.
The package comes less than a day after Swiss bank Credit Suisse signed an emergency central bank loan of up to $54 billion to boost liquidity.
These trades helped restore calm to global markets on Thursday and Friday after an intense week for bank stocks.
But First Republic’s stock rose 10% on news of the bailout, but after the bank announced it would suspend its dividend, revealing how much cash it had and how much emergency liquidity it needed, the aftermarket The stock fell 18% in trading.
Analysts say authorities want to address systemic risks quickly, but fear the possibility of a banking crisis isn’t over yet.
“They keep their money in the First Republic and live on for their own self-interest…to stop cracking down on the banks. Then they slowly take it away and the banks die a slow death.” ,” said Matan Somasundaram, founder of Sydney-based research firm Deep Data Analytics.
“President Yellen made it clear overnight that all bank deposits are protected, but the bank may not exist,” he said.
Some of the largest US banks were involved in the rescue, including JPMorgan Chase & Co, Citigroup Inc, Bank of America Corp, Wells Fargo & Co, Goldman Sachs and Morgan Stanley, according to a bank statement.
The aid prevented an imminent collapse, but investors were surprised by the delay in disclosing the First Republic’s cash position even after the injection.
Thursday’s data showed U.S. banks asked the Federal Reserve for a record amount of emergency liquidity in recent days, after months of contraction, the central bank’s We have increased the size of our balance sheet.
More broadly, concerns about the risk of contagion persist.
“I don’t think we are in the middle of a global financial crisis. Balance sheets are much better than they were in 2008 and banks are better regulated,” said RBC Capital Markets Australia. Karen Joritsuma, Head of Equities, said. “But people are concerned that the risk of contagion is real, and it’s undermining confidence.”
Lessons learned in 2008
For now, officials are confident the banking system is resilient and are trying to underscore that the current turmoil is different from the global financial crisis 15 years ago.
On Thursday, the European Central Bank pushed for a 50 basis point rate hike, arguing that eurozone banks were in good shape and, if anything, a move to raise rates should strengthen margins.
The focus now is on the Fed’s policy decision next week and whether it will continue to aggressively raise rates in an attempt to keep inflation under control.
In Asia, he said Singapore, Australia and New Zealand are monitoring financial markets, but he is confident that local banks are well-capitalized and can withstand major shocks.
Bank stocks have fallen globally since the Silicon Valley Bank collapsed last week. That’s because bond-related losses piled up during last year’s spike in interest rates, raising the question of what else is lurking in the broader banking system.
Within days, market turmoil caught Credit Suisse, forcing it to borrow from the Swiss central bank.
By Thursday, the spotlight was back on the US as big banks stepped up their support for regional lender First Republic. The company’s stock has fallen more than 70% since his March 6th.
Credit Suisse is the first major global bank since the 2008 financial crisis to see contagion fears sweep through the banking sector, casting doubt on whether central banks can sustain aggressive rate hikes to keep inflation in check. Therefore, we adopted an emergency lifeline.
The rapid rise in interest rates has made it difficult for some businesses to pay or repay loans, increasing the likelihood of losses for lenders already fearing a recession.
Credit Suisse shares closed 19% higher on Thursday, recovering some of Wednesday’s 25% decline. European banks have lost about $165 billion in market capitalization since March 8, according to Refinitiv data.