Banks announce $30B rescue for First Republic

NEW YORK – Eleven of the biggest banks in the country announced a $30 billion rescue package for First Republic Bank on Thursday, in an effort to prevent the California-based bank from becoming the third bank to fail in less than a week.

First Republic serves a similar clientele as Silicon Valley Bank, which failed Friday after depositors withdrew about $40 billion. It appears that First Republic, which had deposits totaling $176.4 billion as of Dec. 31, was facing a similar crisis.

In a statement, the group of banks confirmed that other unnamed banks had seen large amounts of withdrawals of uninsured deposits, which are those that exceed the $250,000 level insured by the Federal Deposit Insurance Corporation. First Republic’s shares dropped more than 60% Monday, even after the bank said it had secured additional funding from JPMorgan and the Federal Reserve. Thursday the bank’s shares were down 36%, but rallied after reports the rescue package was in the works, and closed up nearly 9%.

JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have agreed to each put $5 billion in uninsured deposits into First Republic. Meanwhile Morgan Stanley and Goldman Sachs would deposit $2.5 billion each into the bank. The remaining $5 billion would consist of $1 billion contributions from BNY Mellon, State Street, PNC Bank, Truist and US Bank.

“The actions of America’s largest banks reflect their confidence in the country’s banking system,” the banks said in their statement.

The nation’s banking regulators also issued a statement in support of the bank rescue package.

“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” said Treasury Secretary Janet Yellen, Acting Comptroller of the Currency Michael Hsu, Federal Reserve Chair Jerome Powell and FDIC Chairman Martin Gruenberg.

The news could help calm the nerves of bank investors after the collapse last week of Silicon Valley Bank, which was the second biggest bank failure in U.S. history after the demise of Washington Mutual in 2008.

MARY ALTAFFER/AP The rescue package comes as San Francisco-based First Republic has been battered by investors and worries have grown that the midsized bank might be the next to fail, after Silicon Valley Bank and Signature Bank.