New Delhi. The US Banking Crisis is getting deeper in America. After Silicon Valley Bank and Signature Bank, another bank is on the verge of collapse. The financial condition of America’s First Republic Bank is bad and it is gasping for breath. Shares of First Republic Bank fell heavily on Friday. The Federal Deposit Insurance Corporation (FDIC) has asked JP Morgan Chase & Co. (JPMorgan Chase) and PNC Financial Services Group Inc. (PNC Financial Services Group Inc.) to submit final bids by Sunday.
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bank can be sold
According to media reports, San Francisco-based First Republic Bank may soon be sold. If the bank falls into receivership, it will be the third US bank to fail in a month since last month. Shares of First Republic Bank plunged as much as 54 per cent in New York trading on Friday and closed down 43 per cent on speculation that the US banking regulator might put it into receivership. The bank’s shares have lost 97 per cent so far this year.
A group of 11 banks deposited $30 billion into First Republic in March to buy time to find a solution. These included JPMorgan Chase & Co., Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley. Meanwhile, the US banking regulator is preparing to put First Republic Bank under immediate receivership, according to Reuters news.
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huge drop in deposits
Earlier this week, First Republic Bank reported that its deposits fell by $100 billion in the first quarter. Since then, the crisis on the bank started deepening and its shares started falling sharply. After March 9 this year, there has been a decrease of about $ 70 billion in bank deposits. Bank deposits stood at $173 billion on March 9. It came down to $102.7 billion on April 21. However, regional bank officials said in an earnings report this week that the bank had sufficient cash reserves to meet customers’ needs.
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Aggressive interest rates increased trouble
The Federal Reserve’s aggressive stance on interest rates has created difficulties for some businesses. Because of this, they are not able to pay the loan to the banks. The Federal Reserve has sharply increased interest rates. Silicon Valley Bank became the first victim of the banking crisis in America and after that Signature Bank also lost its breath. One of Europe’s largest banks, Credit Suisse, was saved from collapse by the buyout of UBS. America’s banking crisis has shaken the global market. IT companies have been most affected by the collapse of Silicon Valley Bank.
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Fear of recession intensifies
The fear of economic recession has intensified due to the banking crisis. The phase of retrenchment is going on in big companies around the world. The quarterly results of IT sector companies have been less than expected. The March quarter results of India’s two biggest IT companies Infosys and TCS were disappointing.
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Experts believe that the reason for the decline in the performance of these two companies is the banking crisis in America. The Banking Financial Services and Insurance (BFSI) segment is the most important for the IT sector. The US banking crisis hit it. America generates the most revenue for Infosys. Infosys’ BFSI performance has been disappointing due to high exposure.
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