First Republic gets $30 billion of bank deposits in rescue
The U.S.’ biggest banks agreed to deposit $30 billion with First Republic Bank in an effort to stem the turmoil that’s sent depositors fleeing from regional banks and shaken the country’s financial system.
Jpmorgan Chase &
Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. will contribute $5 billion of uninsured deposits each, while Goldman Sachs Group Inc. and Morgan Stanley will kick in $2.5 billion apiece, according to a statement Thursday. Other banks will deposit smaller amounts.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes,” the banks said in the statement.
The consortium cited the outflows of uninsured deposits at a small number of banks following the collapse of Silicon Valley Bank and Signature Bank.
First Republic has been exploring strategic options including a possible sale, Bloomberg News reported late Wednesday. The lender’s shares have plummeted in the aftermath of regulators’ seizure of fellow regional lenders Silicon Valley Bank and Signature Bank over the past week.
“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” U.S. Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell, Federal Deposit Insurance Corp. Chairman Martin Gruenberg and Acting Comptroller of the Currency Michael Hsu said in a joint statement.
Also contributing deposits are PNC Financial Services Group Inc., Bank of New York Mellon Corp., Truist Financial Corp., U.S. Bancorp and State Street Corp., which will each put in $1 billion.
“This unprecedented private sector collaboration is a powerful step to bolster liquidity and reflects our confidence in the critical role of regional banks in our economy and across the communities we serve,” Truist Chief Executive Officer Bill Rogers said in an emailed statement.
Shares of First Republic swung wildly Thursday, plunging as much as 36% early in the day, then surging as much as 28% midday after details of the emerging plan were first reported. The stock closed up 10% and then slipped in extended New York trading after the bank announced it was suspending its dividend.
First Republic specializes in private banking and has built up a wealth-management franchise with some $271 billion in assets.