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| 11 Major US Banks to Deposit $30 Billion into First Republic Bank Following Collapse of Mid-Sized Lenders |
11 US private banks, including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley, have announced plans to deposit a total of $30 billion into First Republic, the 14th largest US bank by assets. This move by the largest banks aims to shore up First Republic and bolster the financial system following the collapse of three mid-sized lenders in the past week, including Silicon Valley Bank. The consortium of banks plans to deposit $5 billion each, except Goldman Sachs and Morgan Stanley, which will put in $2.5 billion each. Another group of five lenders, including PNC Bank and US Bank, will allot $1 billion each.
First Republic's "affluent" client base is concentrated in coastal urban areas, and it is known for private banking and wealth management. As a result, it has a large percentage of uninsured deposits that has kept it under scrutiny after the failures of Silicon Valley Bank and Signature Bank. Despite the actions of federal banking regulators and the bank's efforts to increase borrowing availability, S&P Global Ratings has downgraded First Republic due to the elevated risk of deposit outflows. According to S&P, 68% of the bank's accounts hold deposits of more than $250,000, the level automatically guaranteed by US regulators.
First Republic founder Jim Herbert and CEO Mike Roffler welcomed the collective support, stating that it strengthens the bank's liquidity position and is a vote of confidence for the bank and the entire US banking system. The move by the 11 banks comes after emergency measures taken Sunday night by the Federal Reserve and other US regulators to assure all depositors of two failed banks, Silicon Valley Bank and Signature Bank. Wall Street stocks finished solidly higher following the announcement by the consortium of banks.
