Combined deposits from US banking giants including Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co and Wells Fargo & Co received a lifeline for $30 billion in deposits in the first quarter to $104.47 billion
Another US banking crisis appears to be looming. Signs of this were seen on Monday after the figures of American Bank First Republic came out. When the lender said that there has been a decline of more than $ 100 billion in bank deposits in the first quarter. Now thinking of reducing his expenses. Under which options like retrenchment of 25 percent from the staff are also included. After the arrival of this news, a huge decline of 20 percent was also seen in bank shares.
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The bank plans to reduce expenses by cutting executive compensation in the second quarter, reducing office space by laying off about 20 percent to 25 percent of employees. The company’s target is to increase its insured deposit amount and cut down on borrowing from the Federal Reserve Bank. Bank CEO Mike Roffler said that we are taking steps to reduce our expenses along with reducing the size of the balance sheet.
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There is less trust in regional banks
First Republic has come into focus following the collapse of Silicon Valley Bank (SVB) and Signature Bank last month. The collapse of both banks shook the confidence of US regional banks and prompted customers to transfer billions of dollars to larger institutions. First Republic’s finance chief Neil Holland said that March saw a significant number of deposit withdrawals with many banks closing.
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Deposits fell to $104.47 billion in the first quarter, compared with a quarter last year, despite receiving a lifeline for $30 billion in combined deposits from U.S. banking giants including Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Deposits in the quarter stood at $176.43 billion. Even leaving aside the help of big banks, there has been a decline of about 102 billion in deposits.
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Big drop in stocks
According to the report of the Financial Times, the shares of First Republic fell by 20 per cent in a few hours of trading after the opening of the stock market in New York and saw a recovery of 18 per cent. When the markets were open, there was a rise of 12 percent in them. This year, more than 90 per cent decline has been seen in the share value of the bank.