Several big U.S. banks come to the rescue of First Republic Bank
CBC
First Republic Bank has received $30 billion US in deposits from several big banks, the banks said in a statement on Thursday, as part of a rescue package for the lender.
JPMorgan Chase & Co, Citigroup, Bank of America Corp, Wells Fargo & Co, Goldman Sachs Group, Morgan Stanley and others are involved in the rescue, according to the statement.
First Republic's shares were last up nearly six per cent at $32.92 US in volatile trading on Thursday. The stock tumbled 36 per cent earlier in the day before reports of the rescue plan sent them up as much as 40 per cent.
The shares have lost two-thirds of their value in the past seven days and are down more than 65 per cent month-to-date.
A round of financing on Sunday raised through JPMorgan Chase & Co, gave First Republic access to a total of $70 billion US in funds, but failed to calm investors as worries of a contagion deepened in the wake of two large-scale collapses in the banking industry.
The rescue effort was initiated by banks but had strong backing and encouragement from the government, according to a person with knowledge of the matter.
The U.S. Treasury Department, Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency confirmed the deposits in a joint statement on Thursday.
Founded in 1985, First Republic had $212 billion US in assets and $176.4 billion US in deposits as of the end of last year, according to its annual report.
About 70 per cent of its deposits are uninsured, above the median of 55 per cent for medium-sized banks and the third highest in the group after Silicon Valley Bank and Signature Bank, according to a Bank of America note.
Earlier on Thursday, Reuters reported PacWest Corp is also in talks about a liquidity boost with investment firm Atlas SP Partners.
