11 Big Banks Unite to Inject $30 Billion into First Republic Bank
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. 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. 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.
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.” 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.”
The bank is also exploring other options to shore up liquidity, including a sale. 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.
On Sunday, First Republic declared new funding from the Federal Reserve and JPMorgan Chase to help bolster its financial position. First Republic now has $70 billion in unused liquidity, enabling it to react to possible customer withdrawals.
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.
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. All of America's major financial institutions are in agreement to help bolster our economy, as well as those of our neighbors.
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
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