Troubled Bank Shares Dip Despite $84 Billion Liquidity Boost
Shares in First Republic Bank and Credit Suisse fell deep into the red on Friday as concerns of a broader banking crisis in the US and Europe remained high.
The US regional lender’s perceived value fell 25%, while Switzerland’s second-largest bank closed down 8% despite huge financial lifelines thrown in by regulators in the previous 24 hours.
Larger US banks, including JPMorgan Chase & Co and Morgan Stanley, stepped in on Thursday to inject $30bn (€28bn) into First Republic to prevent it from suffering a depositor run similar to Silicon Valley Bank and Signature Bank – two regional creditors that fell last week.
First Republic’s strengthening reflected “funding and liquidity strains on banks, driven by weakening depositor confidence,” said ratings agency Moody’s, which this week downgraded its outlook on the US banking system to negative.
Time of Swiss purchase interventions
In Europe, the Swiss central bank granted Credit Suisse an emergency loan of up to $54 billion, also on Thursday.
But many analysts, investors and bankers think the loan just gave Credit Suisse some time to decide what to do next.
The US and Swiss moves initially boosted equity markets. However, the sell-off resumed on Friday and the stock prices of other major banks also fell, with JP Morgan, Citigroup and Bank of America all down at least 3% at one point. Many of its European peers ended Friday down around 1.5%.
Source: DW
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