As news unfolded last week regarding the collapse of Silicon Valley Bank (SVB), the banking sector was most concerned about contagion. Despite SVB operating as a mid-sized bank and falling beneath the threshold of what the US regulators considered a systemically important institution, its downfall raised concerns about the financial readiness of other similarly sized lenders. US onlookers did not have to wait long.
Following a downgrade in its credit rating due to what credit rating agencies cited as “a high proportion of uninsured deposits”, California-based private bank First Republic found itself the recipient of an unprecedented rescue package from 11 American banks including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Truist Financial, which deposited $30bn with the bank.