Al-Marsad Newspaper: The shares of the American bank “First Republic Bank” plunged in trading yesterday, Monday, by about 47%, after the failure of a multibillion-dollar bailout deal arranged by major American banks for it.
First Republic Bank’s fall follows the recent sudden collapse of Silicon Valley and Signature Bank, which raised fears that nervous customers might withdraw their deposits from other US banks.
According to “Bloomberg” agency data, “First Republic Bank” shares closed Monday’s trading, down by 47.11%, at $12.18.
Reasons collapse
For his part, the economist Alexander Nazarov explained the reasons for the recent collapse of US banks.
He said in a post on his Telegram channel, saying: “After the Federal Reserve raised the interest rate, investing in money market funds became more profitable than keeping money deposited in the bank. (Money market funds invest in short-term US government bonds and other commercial bonds), meaning that People started withdrawing money from bank deposits, since the summer of 2022 they have withdrawn half a trillion dollars from American banks, and recently the withdrawal has accelerated dramatically.
He added, “With that, the Fed will have to decide on Wednesday whether to continue raising interest rates, keeping deposits flowing and killing the banks, or undoing ‘quantitative tightening’ and encouraging inflation again. But the Fed can play a crazy experiment.” It’s about raising the interest rate and at the same time launching quantitative easing for a select few.”
