11 US Banks Unite to Rescue First Republic Bank with $30 Billion Deposit Injection
On Thursday afternoon, 11 of America’s largest banks announced a $30 billion deposit injection into First Republic Bank in an effort to stabilize the bank and boost confidence in the U.S. banking system. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are each contributing $5 billion, Goldman Sachs and Morgan Stanley are providing $2.5 billion each, and Bank of New York Mellon, PNC Bank, State Street, Truist and U.S. Bank are making deposits of $1 billion each.
The move comes after First Republic witnessed a sharp decline in its share price due to the failure of Silicon Valley Bank and worries that it could be next. This was followed by ratings agencies Fitch Ratings and S&P Global Ratings downgrading First Republic Bank’s credit rating on Wednesday due to concerns that depositors could pull their cash. In addition, Credit Suisse announced it would borrow up to 50 billion Swiss francs, or about $54 billion, from the Swiss National Bank, taking advantage of a lifeline after its stock crashed as much as 30%.
American authorities seem content with the possibility of a business-driven rescue of First Republic. CNN reported that a US official commented that it was a positive sign of faith in the banking system that America’s biggest banks are discussing offering assistance to the San Francisco-based lender. 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 news came after some of First Republic’s executives sold $11.8 million worth of stock in the company over the last two months, with Executive Chairman James Herbert II selling $4.5 million worth of his shares since the start of 2023.
Overall, the rescue plan is an unprecedented move by the US’s largest banks and is a sign of confidence in the banking system. It also provides a lifeline for First Republic and other regional, midsize and small banks. All of this news is a reminder that America’s largest banks are united with all banks to support our economy and all those around us.
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