AOn one hand, the banking and real estate crisis is at its peak in China, while the situation in America is also bad. Here the banking crisis has deepened and the latest example of this is Republic First Bank.
This is the first American bank of the year 2024, which has collapsed. Before this, many banks had failed last year. According to the report, the Federal Deposit Insurance Corporation (FDIC) has seized it, highlighting all the shortcomings. Let us know why such a situation arose?
Why did the FDIC seize the bank?
According to a Reuters report published on Business Today, this is the first bad news of the year for the US banking sector. Last Friday, the Federal Deposit Insurance Corp (FDIC) said that US regulators have seized Republic First Bancorp and agreed to sell it to Fulton Bank.
Regarding Republic First Bank, a regional bank operating in Pennsylvania, New Jersey and New York, the FDIC said that as of January 31, 2024, this bank had assets of $6 billion and deposits of about $4 billion. At the same time, after the failure of this bank, the Deposit Insurance Fund may have to bear a burden of about $667 million.
Fulton Bank took over
According to the report, Fulton Bank has now taken over Republic First Bank after its failure. Fulton Bank has bought all the deposits and assets of this bank. Not only this, from Saturday, 32 branches of Republic First Bank have been opened in the name of Fulton Bank branch. Earlier, Citizen Bank, Silicon Valley and Signature Bank have also been closed, which are big examples of the deepening banking crisis in America.
Last year in 2023, the Wall Street Journal said in a report that Republic First Bank had struck a deal with an investment group, but this effort also failed by February 2024. After the deal failed, the FDIC resumed efforts to seize and sell the bank.
Signs started appearing from last year itself
The crisis in Republic First Bank started deepening since last year, when the bank started cutting jobs heavily. Not only this, it exited the mortgage business, the reason behind this was high cost and lack of improvement in profit. The condition of the bank’s stock also worsened by the year 2024 and on April 26, the price of one share of the bank fell from $ 2 to about 1 cent and its market capitalization also decreased to less than $ 2 million.
This is also a big reason for bank failure!
There are many reasons behind the failure of banks in this way, but the biggest reason is the continuous decline in the value of outstanding loans taken against property. It is worth noting that the high level of interest rates (US Policy Rate) and the fall in the value of commercial real estate have increased the financial risk for many regional and community banks.
