First Republic Bank gets US$30 billion in deposits from big banks in rescue effort

The US’s biggest banks agreed to deposit US$30 billion with First Republic Bank in an effort to stem the turmoil that has sent depositors fleeing from regional banks and shaken the country’s financial system.

JPMorgan Chase, Bank of America, Citigroup and Wells Fargo will contribute US$5 billion of deposits each, while Goldman Sachs and Morgan Stanley will kick in US$2.5 billion apiece, according to a statement Thursday.

PNC Financial Services, Bank of New York Mellon, Truist Financial, US Bancorp and State Street will each contribute US$1 billion.

“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes,” according to a statement.

First Republic has been exploring strategic options including a possible sale, Bloomberg News reported late on 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.

Shares of First Republic swung wildly on Thursday, plunging as much as 36 per cent early in the day, then surging as much as 28 per cent by midday after details of the emerging plan were first reported.

Shares were up 12 per cent at 3.27pm in New York. Trading was paused multiple times during the day for volatility.

First Republic, which specialises in private banking and has built up a wealth-management franchise with some US$271 billion in assets, has made an effort to differentiate itself from SVB Financial Group’s Silicon Valley Bank.

Unlike SVB, which counted start-ups and venture firms among its biggest clients, First Republic said that no sector represents more than 9 per cent of total business deposits.

Silicon Valley Bank collapse sounds alarm in China over financial risk

Silicon Valley Bank collapsed into Federal Deposit Insurance Corp receivership on Friday after its customer base of tech start-ups grew concerned and pulled deposits.

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

The US Federal Reserve has lent US banks close to US$12 billion under its new one-year lending programme unveiled on Sunday in the wake of the collapse of Silicon Valley Bank.

The total outstanding amount of all advances under the Bank Term Funding Programme reached US$11.9 billion by Wednesday, the United States central bank announced in a statement on Thursday.

Additional reporting by Agence France-Presse