11 Big Banks Unite to Inject $30 Billion into First Republic Bank
By This week, 11 of America’s largest banks have united to inject $30 billion in deposits into First Republic Bank in a move to stabilize the lender and restore confidence in the US banking system.[0] Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are each making a $5 billion uninsured deposit into First Republic, while Goldman Sachs and Morgan Stanley are contributing $2.5 billion each. Bank of New York Mellon, PNC Financial, State Street, Truist and U.S. Bancorp are each making an uninsured deposit of $1 billion.
The move follows the collapse of Silicon Valley Bank and Signature Bank over the weekend, which had a high percentage of uninsured deposits.[1] Fitch Ratings and S&P Global Ratings had downgraded First Republic’s credit rating to junk status due to concerns that depositors could pull their money out.[2]
In a joint statement, leaders of the FDIC, Treasury, Fed and Office of the Comptroller of the Currency (OCC) said the “show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system.”[3] Treasury Secretary Janet Yellen told the Senate Finance Committee Thursday: “This week’s actions demonstrate our resolute commitment to ensure that our financial system remains strong and the depositors’ savings remain safe.”[4]
The bank is also exploring other options to shore up liquidity, including a sale.[5] Bloomberg reported that, according to people familiar with the situation, larger competitor banks are likely to be eager to acquire the San Francisco-based lender.[5]
On Sunday, First Republic declared new funding from the Federal Reserve and JPMorgan Chase to help bolster its financial position.[6] First Republic now has $70 billion in unused liquidity, enabling it to react to possible customer withdrawals.[6]
Jim Herbert, First Republic’s founder and executive chairman, and CEO Mike Roffler declared in a statement on Sunday that the bank's capital and liquidity positions are very strong, and that its capital remains well above the regulatory threshold for well-capitalized banks.[6]
The banking crisis has highlighted the importance of smaller- and medium-sized banks in supporting their local customers and businesses, creating millions of jobs and helping uplift communities.[7] All of America's major financial institutions are in agreement to help bolster our economy, as well as those of our neighbors.[7]
0. “Wall Street banks rescue First Republic” Financial Times, 17 Mar. 2023, https://www.ft.com/content/3564b6e0-af7e-41b5-b516-d9bc8f5cd682
1. “Wall Street rides to the rescue as 11 banks pledge First Republic $30 billion in deposits” CNBC, 16 Mar. 2023, https://www.cnbc.com/2023/03/16/group-of-financial-institutions-in-talks-to-deposit-about-20-billion-in-first-republic-sources-say.html
2. “SVB crisis: First Republic Bank is looking at a possible sale, per BBG” Business Insider, 15 Mar. 2023, https://www.businessinsider.com/svb-crisis-first-republic-bank-possible-sale-ratings-junk-2023-3
3. “First Republic gets new rescue as “ghosts of 2008″ haunt markets” Axios, 17 Mar. 2023, https://www.axios.com/2023/03/16/first-republic-rescue-markets
4. “First Republic Bank getting bailed out by large banks in $30 billion plan” The Hill, 16 Mar. 2023, https://thehill.com/business/economy/3903884-first-republic-bank-getting-bailed-out-by-large-banks-report
5. “First Republic Bank Exploring Sale, Other Strategic Options” The Real Deal, 16 Mar. 2023, https://therealdeal.com/national/2023/03/15/first-republic-exploring-sale-report/
6. “First Republic Bank stock tumbles on credit downgrade and deposit worries” CNN, 15 Mar. 2023, https://www.cnn.com/2023/03/15/investing/first-republic-downgrade/index.html
7. “First Republic Gets $30 Billion Lifeline from JPMorgan, Citi, Bank of America, Wells Fargo” Investopedia, 16 Mar. 2023, https://www.investopedia.com/first-republic-s-usd30b-rescue-by-jp-morgan-citi-and-bank-of-america-7367932
