First Republic Gets $30 Billion Rescue From Top US Banks

Posted 9 days ago


First Republic Bank will receive $30 billion from some of the top U. S. banks in a bid to stabilize the troubled firm, the banks confirmed in a March 16 joint statement.

Eleven of the largest U. S. financial institutions will provide an infusion to the bank following a volatile week that saw the lender’s shares plunge following the collapse of Silicon Valley Bank (SVB) last week, the institutions stated, confirming anonymously sourced reports that there were discussions to shore up First Republic.

“The actions of America’s largest banks reflect their confidence in the country’s banking system. Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most,” the banks said in the March 16 statement. “Smaller- and medium-sized banks support their local customers and businesses, create millions of jobs and help uplift communities. America’s larger banks stand united with all banks to support our economy and all of those around us.”

The banks that will provide deposits include Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist, and U. S. Bank. Those deposits will be uninsured, the statement said.

The U. S. Department of Treasury, Federal Deposit Insurance Corp., and the Federal Reserve also issued a statement confirming the move.

“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” the agencies stated.

After the collapse of SVB and New York’s Signature Bank, there were fears that contagion would spread to First Republic. The institution, like the aforementioned two, reportedly had a large number of uninsured deposits, triggering fears that customers would withdraw their money en masse.

First Republic’s stock closed at roughly $115 per share on March 8, but as of March 16, it traded below $20 as it was halted multiple times throughout the week. By the end of regular trading on March 16, its shares rose by almost 10 percent.

Ratings service Moody’s said on March 14 that it would put First Republic under review for a downgrade because of the highly volatile funding conditions for it and other U. S. banks exposed to uninsured deposit withdrawals.

The development could help calm the nerves of bank investors after the collapse last week of SVB, which was the second biggest bank failure in U. S. history, after the demise of Washington Mutual in 2008. The shuttering of SVB on March 10 and of New York-based Signature Bank two days later has revived bad memories of the financial crisis that plunged the United States into the Great Recession of 2007–09.... (Read more)