US private bank First Republic secured additional financing through JPMorgan
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First Republic, a private bank based in the United States, has revealed that it obtained additional financing through JPMorgan Chase & Co. The additional funding gave the bank access to $70 billion worth of funds.
First Republic gets additional financing through JPMorgan
The announcement by the First Republic Bank comes after the company shares were dealt a major blow last week. The crisis witnessed across the US banking industry last week led to a plunge in the stocks of most banks. The crisis was attributed to a run on SVB Financial Group and the closure of Silicon Valley Bank.
The collapse of Silicon Valley Bank on Friday led the US Federal Reserve, among other regulators in the country, to announce several emergency measures that would be taken to boost confidence in the banking industry.
First Republic issued a statement on the matter that it had received additional borrowing capacity from the Federal Reserve, and the financing through JPMorgan enabled the bank to boost the amount of liquidity available.
However, it appears as if the assurance of liquidity is doing little to boost investor confidence. The bank’s shares have plummeted by over 60% in the premarket.
A banking crisis in the United States
The United States has been witnessing a banking crisis that has led to the Federal Reserve taking measures to shore up confidence from depositors. On Sunday, state regulators shut down New York-based Signature Bank, marking the third-largest banking failure in the United States.
The Federal Deposit Insurance Corporation took control of Signature Bank. The bank had $110.36 billion in assets and $88.59 billion in deposits by the end of 2022. US regulators have said that the depositors in this bank will be made whole.
The closure of Signature Bank happened barely two days after the collapse of Silicon Valley Bank, the second-largest banking failure in US history. The largest banking failure in US history was in 2008, after the collapse of Washington Mutual.
The collapse of SVB raised concerns as the bank was focused on startup companies. Moreover, it ranks as the 16th largest lender in the United States but was swiftly overwhelmed by customer withdrawals. The crisis at the bank last week led to over $100 billion in market value being wiped from the US bank triggering swift action from US regulators.
On Sunday, the FDIC created a “bridge” bank that will allow the affected customers at SVB to access their funds after the markets open on Monday. The depositors and borrowers will automatically be treated as customers in the new bridge bank.
The FDIC has named Greg Carmichael, the former Chief Executive at Fifth Third Bancorp, as the CEO of this bridge bank. All Silicon Valley Bank customers will access their funds on Monday, with US regulators set to take more actions to boost deposits and ensure no fallout in the banking sector.
