Major US banks help stumbling regional bank

First Republic, a regional bank in California, is in a difficult situation due to liquidity problems and heavy losses on the stock market. In order to strengthen confidence in the U.S. financial system, eleven major banks have now joined forces and provided a multi-billion dollar cash injection. JPMorgan, Bank of America, Citigroup and Wells Fargo are each contributing five billion dollars, while Goldman Sachs and Morgan Stanley are each contributing 2.5 billion dollars. The remaining funds will come from smaller banks such as BNY Mellon, PNC and US Bancorp.

The cash infusion is intended to provide liquidity to First Republic and underscore confidence in the U.S. banking system, according to Citigroup. Unlike Silicon Valley Bank and Signature Bank, which were recently shut down by regulators and placed under government control, major U.S. banks have stepped in themselves. The move is described as "most welcome" and demonstrates the resilience of the banking system.

The U.S. government has been trying to ease the situation for days. After the collapse of Silicon Valley Bank, it had introduced a far-reaching deposit guarantee over the weekend to calm the nerves of bank customers. Treasury Secretary Janet Yellen reiterated at a congressional hearing in Washington that the banking system remains stable and safe and there is no need to worry about deposits. The bailout of First Republic shows that major U.S. banks are able to work together in times of crisis and join forces to stabilize the financial system.

The support of the 11 major banks reflects confidence in First Republic and the U.S. banking system as a whole, Citigroup said. But despite this positive development, the situation remains tense and the U.S. government will continue to be challenged to ensure the stability of the banking system.