United States authorities are reportedly deliberating on “expanding” an emergency credit line for banks, which may provide First Republic Bank a time buffer to address balance sheet concerns, according to people familiar with the situation.
In a March 26 Bloomberg report citing unnamed sources, it was reported that U.S. officials are ruminating on what support, “if any,” can be provided to First Republic, however an “expansion of the Federal Reserve’s offering” is one of the options being explored.
First Republic was reportedly deemed “stable enough to operate” by regulators without the need for an “immediate intervention,” as efforts are made by the bank in the meantime to “shore up its balance sheet.”
The sources reportedly noted that while the Fed’s liquidity offerings would be expanded in accordance with banking law, which stipulates that it must be “broadly based” and not aimed at benefiting a specific bank, they also warned that the alteration could be “made in a way” that ensures First Republic Bank benefits.
Related: Let First Republic and Credit Suisse burn
It was reported that despite First Republic facing structural challenges with its balance sheet, “the bank’s deposits are stabilizing” and is not at risk of experiencing “the kind of sudden, severe run” that led regulators to close down Silicon Valley…
