BREAKING: First Republic gets $30 billion rescue from biggest US banks
S&P Global Ratings and Fitch Ratings cut First Republic to junk earlier this week amid concern that clients pull holdings from the lender.
Close-up of sign with logo on facade at First Republic Bank branch in San Ramon, California, March 16, 2023.began after the historic failure of Silicon Valley Bank — the 16th largest in the country — on Friday afternoon following a liquidity crunch. It marked the largest U.S. bank failure since the global financial crisis in 2008.
SVB, which largely catered to tech companies, venture capital firms and high-net-worth individuals, saw a huge boom in deposits during the pandemic, with its assets surging from $56 billion in June 2018 to $212 billion in March 2023. The bank responded by investing a large chunk of that cash into long-term U.S. Treasury bonds and other mortgage-backed securities.
That coincided with a decline in available funding for startups, which started drawing down more of their money to cover their expenses, forcing the lender to sell part of its bond holds at a steep $1.8 billion loss. When depositors realized that SVB was in a precarious financial situation, a bank run ensued.
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