European Central Bank (ECB) supervisors meet this Friday in an extraordinary way to address the growing cracks in the banking system After the $30,000 million bailout of the American bank First Republic Bank. Major US banks flocked on Thursday to bail out the San Francisco-based bank, which was caught in a deepening turmoil caused by the failure of two other midsize US lenders.
The ransom package arrived less than a day later. Credit Suisse It will receive up to $54,000 million in emergency loans from the central bank to strengthen its liquidity. Shares of Switzerland’s second-largest bank fell on Friday morning. The two deals helped restore some calm in global markets after a tough week for bank stocks.
“Exchanging views of the Supervisory Board and to provide its members with up-to-date information on the latest developments in the banking sector.‘, the agency’s spokesperson told Reuters.
raise rate
The European Central Bank, which raised interest rates by 50 basis points on Thursday, made an unusual move ahead of its meeting earlier this week, scheduled for next week. “The French and European banks are very solid,” François Villeroy de Galhau, head of economic policy at the European Central Bank and head of the French central bank, told BFM business radio.
Analysts claim authorities seem willing to quickly address systemic risks, but they worry that the possibility of a full-blown banking crisis is far from over. Thursday’s data showed that US banks had in recent days enlarged the central bank’s balance sheet after months of contraction, demanding record amounts of emergency liquidity from the Federal Reserve.
First Republic Bank bailout
The First Republic agreement, among them U.S. Secretary of the Treasury Janet Yellen, Chairman of the Federal Reserve, Jerome Powell and CEO of JP Morgan Chase, Jamie DiamondDiscussing the package this week, said a source familiar with the situation.
“They will keep the money in the First Republic to keep it alive for their own benefit. (…) to stop the bank flow. “Then they will phase it out and the bank will die slowly,” Mathan Somasundaram, founder of Sydney-based research firm Deep Data Analytics, said on Friday.
Despite First Republic shares rose 10% on news of the bailout. Post-market trading fell 17% after the bank said it would suspend dividend distribution and announced its cash situation and how urgently it needed liquidity.