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AmericasMarch 21 2023

SVB fear unfolds in US banking sector

Is the ‘one off’ First Republic rescue enough to quell fears in the US banking system? Liz Lumley reports.
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SVB fear unfolds in US banking sectorImage: Getty Images

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. 

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Liz Lumley is deputy editor at The Banker. She is a global specialist commentator on global financial technology or ‘fintech’. She has spent over 20 years working in the financial technology space, most recently as director at VC Innovations and architect of the Fintech Talents Festival, managing director at Startupbootcamp FinTech London and an editor at financial services and technology newswire, Finextra. She was named Journalist of the Year for Technology and Digital Finance at State Street’s UK Press Awards for 2022.
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