US insists banking system ‘sound’ as banks pledge billions to First Republic – latest

Thomas Kingsley takes a close look at the Swiss bank at the centre of this week’s financial ructions.

Wall Street’s main indexes rebounded strongly on Thursday after news and then confirmation that some of the US’s largest financial institutions were coming to the aid of First Republic Bank.

The banks have agreed to deposit $30bn in First Republic Bank to demonstrate confidence in the US banking system.

Bank of America, Wells Fargo, Citigroup and JPMorgan Chase will contribute about $5bn each, while Goldman Sachs and Morgan Stanley will deposit approximately $2.5bn, the banks said in a news release.

Truist, PNC, U.S. Bancorp, State Street, and Bank of New York Mellon will deposit around $1bn each.

The Dow Jones Industrial Average index went up 371.98 points, or 1.17%, to close at 32,246.55 points. The S&P 500 added 1.76% to close at 3,960.34. The Nasdaq Composite increased by 2.48% to 11,717.28.

It’s been a case of lather, rinse, repeat in banking this week, with with the collapse of Silicon Valley Bank followed by a much bigger crisis in the form of Credit Suisse.

Mid-sized SVB was more systemically significant than many had assumed, raising big questions about US oversight.

But there was never any doubt about the dangers from a stricken Credit Suisse, a pillar of the Swiss banking establishment and a (shaky) member of the top table.

Let’s start off with the good thing that has emerged from the collapse of Silicon Valley Bank, which handled roughly a quarter of the companies in the UK tech sector and had been threatening a meltdown.

The UK arm has been rescued via a deal put together over the weekend by the Bank of England, the government, and HSBC – the bank that is picking up the pieces after “a competitive process” and (so we are told) sparing the taxpayer a nasty wallop in the process.

There is something comfortingly old-school about the way this was brokered behind closed doors. The end result is that the business will be shifted to HSBC UK, meaning that depositors will be able to get their money and tech workers their wages.

The tech and start-up-focused lender based in Santa Clara, California, was taken over by regulators on Friday during a run on its deposits, making it the second-largest bank failure in US history.

Markets are steadying on Thursday night amid hopes that the new lifelines will limit any “contagion” to other banks.

Thomas Kingsley and Alastair Jamieson take a look at what’s happening.

The collapse of Silicon Valley Bank and Signature Bank has sent some customers rushing to pull their money out of smaller banks, which has resulted in a windfall of new deposits for larger institutions.

London’s top shares faced a rollercoaster session on Thursday, with traders sending the FTSE 100 up and down throughout the day, but despite turbulent trading it managed to close on a high.

Coming off the index’s worst day for three years on Wednesday amid worries over the future of banking giant Credit Suisse, Thursday trading was highly erratic.

The top tier index initially gained ground, looking set for a rebound as trading opened after Swiss authorities extended a £45 billion emergency loan to the under-pressure bank.

But through the day it was knocked around like a yo-yo, at one point even dipping into negative territory. By the end of the day it had gained 0.9%.

It’s been a case of lather, rinse, repeat in banking this week, with with the collapse of Silicon Valley Bank followed by a much bigger crisis in the form of Credit Suisse.

Mid-sized SVB was more systemically significant than many had assumed, raising big questions about US oversight.

But there was never any doubt about the dangers from a stricken Credit Suisse, a pillar of the Swiss banking establishment and a (shaky) member of the top table.

The Massachusetts Democrat and longtime critic of the financial industry made the remarks during a Senate Finance Committee hearing with Treasury Secretary Janet Yellen.

Eric Garcia has the full story.