Wall Street giants have moved to end the USs spiraling banking crisis by agreeing to prop up troubled First Republic, a mid-sized bank whose shares have been pummeled amid a wider banking turmoil.
Bank of America, Goldman Sachs, JP Morgan and others will deposit $30 billion in First Republic, which has seen customers yank their money following the collapse of Silicon Valley Bank (SVB) and fears that First Republic could be next, te Guardian reported..
"The actions of America's largest banks reflect their confidence in the country's banking system. Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most," the banks said in a joint statement on Thursday.
The big banks have received billions in deposits from smaller, regional banks as the banking crisis has spooked their customers. US authorities swooped in to take control of SVB and New York's Signature bank last weekend after frightened customers pulled their deposits.
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Banks and regulators are hoping that the action will act as a firewall by protecting First Republic and stopping the crisis spreading to other smaller banks, the Guardian reported.
Shares in First Republic -- a San Francisco-based bank that largely caters to wealthier clients including Facebook co-founder Mark Zuckerberg -- had fallen about 70 per cent since the news of SVB's collapse.
They fell another 22 per cent on Thursday before the bailout but ended the day up nearly 10 per cent.
In a joint statement, US Treasury Secretary Janet Yellen, Federal Reserve chair Jay Powell and senior regulators said: "This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system."
The unprecedented rescue plan will see most of the US's largest banks making uninsured deposits into First Republic, the Guardian reported.
Bank of America, Citigroup, JP Morgan Chase and Wells Fargo are each making a $5 billion deposit into First Republic.
Goldman Sachs and Morgan Stanley are each making deposits of $2.5 billion, and BNY Mellon, PNC Bank, State Street, Truist and US Bank are each making a deposit of $1 billion, for a total deposit from the 11 banks of $30 billion.