The US’s largest banks agreed to deposit $30 billion ($45 billion) in First Republic Bank in a bid to stem the turmoil that is sending depositors fleeing regional banks and rocking the country’s financial system.
JPMorgan Chase & Co., Bank of America, Citigroup and Wells Fargo & Co. will each contribute $5 billion in uninsured deposits, according to a statement Thursday, while Goldman Sachs Group and Morgan Stanley each contribute $2.5 billion become . Other banks will deposit smaller amounts.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes,” the banks said in the statement. The consortium led the outflows of uninsured deposits at a small number of banks after the collapses of Silicon Valley Bank and Signature Bank.
First Republic has been reviewing strategic options, including a potential sale, Bloomberg News reported late Wednesday. Shares of the lender have plummeted after regulators seized regional lenders Silicon Valley Bank and Signature Bank last week.
“This sign of support from a group of large banks is very welcome and shows the resilience of the banking system,” said US Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell, Federal Deposit Insurance Corp. Chair Martin Gruenberg. and the acting auditor of the currency, Michael Hsu, said in a joint statement.
Other deposits are made by PNC Financial Services Group Inc., Bank of New York Mellon Corp., Truist Financial Corp., US Bancorp and State Street Corp. contributed, each raising $1 billion.
“This unprecedented collaboration with the private sector is an important step in strengthening liquidity and reflects our confidence in the critical role regional banks play in our economy and in the communities we serve,” said Bill Rogers, Truist’s chief executive officer, in a statement sent by email.
Shares of First Republic, which has counted the likes of Mark Zuckerberg among its customers throughout its existence, fluctuated wildly on Thursday, plummeting as much as 36 percent early in the day and soaring as much as 28 percent at midday after the announcement was made reported for the first time. The stock closed up 10 percent and then slipped in extended New York trading after the bank announced it would suspend its dividend.
https://www.smh.com.au/business/banking-and-finance/us-giants-put-together-45b-rescue-package-for-teetering-bank-20230317-p5csxf.html?ref=rss&utm_medium=rss&utm_source=rss_business US giants swoop in with $45 billion bailout for small bank