A group of large US banks has injected $30 billion in deposits into First Republic, which had been seen as at risk of failure.
The move to rescue the lender came as authorities in the US are trying to quell panic over the health of banking system, after a series of bank collapses in the US.
Global banking stocks have been battered since Silicon Valley Bank collapsed last week due to bond related losses that piled up when interest rates surged last year, raising questions about the health of the US banking system and what more might be lurking in the wider banking system.
This week has also not been easy on the US banking system as Swiss lender Credit Suisse landed in the market turmoil soup, forcing the bank to borrow up to $54 billion from Switzerland’s central bank to shore up the liquidity.
As per the BBC report, some of the biggest US banking names including JPMorgan Chase & Co, Goldman Sachs, Citigroup Inc, Bank of America Corp, Wells Fargo & Co, and Morgan Santley were involved in the rescue.
US regulators said the show of support was most welcome, and showed the resilience of the banking system.
First Republic Bank’s stock closed up to 10 per cent on news of the rescue but its shares fell 18 per cent in after-market trading, after the bank said it would suspend its dividend, reported Reuters. The bank’s stock price is down more than 70 per cent since March 6.
As per the Reuters report, news of the rescue also helped boost Wall Street indexes, with JP Morgan, Morgan Stanley, and Bank of America all up more than 1 per cent, while the benchmark S&P 500 Banks Index recovered 2 per cent.
Problems in the US banking system surfaced last week when Silicon Valley Bank, one of the largest lender of the country, collapsed in the biggest failure of a US bank since 2008.