First Republic gets $30 billion in bank deposits to the rescue

JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. will each contribute $5 billion in uninsured deposits, while Goldman Sachs Group Inc. and Morgan Stanley will kick in amounts of $2.5 billion, according to a statement Thursday. Other banks will deposit smaller amounts.

“This action by America’s largest banks reflects the confidence they place in First Republic and banks of all sizes,” the banks said in the statement. Signature Bank.

The three-paragraph statement gave no conditions for the commitments. Banks’ initial commitments will extend for at least 120 days, though could extend beyond that, according to people with knowledge of the matter. A representative for the San Francisco-based bank did not immediately respond to a request for comment.

Bloomberg News reported late Wednesday that First Republic is exploring strategic options, including a possible sale. The lender’s shares tumbled after regulators seized fellow regional lenders Silicon Valley Bank and Signature Bank over the past week.

US Treasury Secretary Janet Yellen, Federal Reserve Board Chairman Jerome Powell, Federal Deposit Insurance Corp Chairman and Acting Comptroller Martin Gruenberg said, “This show of support by a group of large banks is welcome and demonstrates the resilience of the banking system.” Is.” currency Michael Hsu said in a joint statement.

Also contributing are PNC Financial Services Group Inc, Bank of New York Mellon Corp, Truist Financial Corp, US Bancorp and State Street Corp, which will each deposit $1 billion.

“This unprecedented private sector collaboration is a powerful step forward to increase liquidity and reflects our belief in the important role regional banks play in our economy,” Bill Rogers, Truist CEO, said in an emailed statement.

Shares of First Republic jumped wildly Thursday, plunging as much as 36% early in the day, then rising 28% by midday after details of the plan emerged. Shares closed up 10% after trading was halted several times during the day for volatility.

First Republic, which specializes in private banking and has built up a wealth-management franchise with about $271 billion in assets, has attempted to separate itself from SVB Financial Group’s Silicon Valley bank. Unlike SVB, which counted startups and venture firms among its largest clients, First Republic said no sector represented more than 9% of total business deposits.

The Silicon Valley bank fell into FDIC receivership on Friday after its customer base of tech startups swelled and pulled deposits.

First Republic Bank is working with JPMorgan as it deals with its challenges. On Sunday, the same day Signature Bank was taken over by regulators, First Republic said it had “further grown and diversified its financial position” by securing additional liquidity from the Federal Reserve and JPMorgan.

“The federal government’s effort to bring the banking sector together, including US Bank, speaks to the strength of the overall financial system,” said a spokeswoman for the Minneapolis-based lender.