America adopted a plan like India’s Yes Bank to save First Republic Bank! 11 banks avoided crisis like this
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In this step of American banks, a glimpse of the Indian formula is visible. It may be noted that during the Yes Bank crisis, some similar steps were taken by big banks in the country. Banks participating in the rescue scheme led by State Bank of India had made huge investments in Yes Bank to save Yes Bank from crisis.
There has been a stir in America’s banking sector once again. The reason is financial crises means financial crisis. Within the last one week, two big banks of America have been locked. First the Silicon Valley Bank of America was closed, after that now the Signature Bank has also been closed. The crisis on another bank of America has been averted for the time being. America’s ‘First Republic Bank’ has been saved from drowning by 11 banks. US banks have announced a $30 billion bailout package to support First Republic Bank. First Republic, a California lender, will collect $5 billion from JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, while Goldman Sachs and Morgan Stanley will each collect $2.5 billion. BNY Mellon, PNC Bank, State Street, Truist and US Bank will each deposit $1 billion.
Efforts to restore confidence in the banking system
On March 16, America’s largest banks expressed confidence in the country’s banking system and announced their commitment to maintaining financial strength and monetary liquidity where it is needed most. Uncertainty remains as to whether the move will re-establish confidence in First Republic and the banking industry as a whole. Despite Thursday’s recovery, First Republic shares are down more than 20 percent in after-market trading. After the collapse of SVB, US banks asked the Federal Reserve for help. The Fed provided aid, lending $160 billion through its discount window and emergency facility in the week ending March 15, indicating wider problems in the banking industry.
What was the case of India’s Yes Bank
In this step of American banks, a glimpse of the Indian formula is visible. It may be noted that during the Yes Bank crisis, some similar steps were taken by big banks in the country. Banks participating in the rescue scheme led by the State Bank of India made huge investments in Yes Bank to save Yes Bank from crisis. Of these, SBI had invested Rs 6050 crore, ICICI Bank Rs 1000 crore, Axis Bank Rs 600 crore and Kotak Mahindra Bank Rs 500 crore.
what about the bank regulator
The banks said in a joint statement that the steps taken by America’s largest banks reflect their confidence in the country’s banking system. We are channeling our financial strength and cash into the larger system where it is most needed. Shares of First Republic fell as much as 36 percent but recovered on news of the relief package. The country’s banking regulators appreciated this relief package by issuing a statement. Following the banks’ move, Treasury Secretary Janet Yellen, Acting Comptroller of the Currency Michael Hsu, Federal Reserve Chairman Jerome Powell and FDIC Chairman Martin Gruenberg said in a statement that the support shown by the group of large banks is welcome and This shows the militancy of the banking system.
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