Major banks are in talks to place up to $30 billion in the First Republic
The nation’s largest banks are close to agreeing on a plan to deposit up to $30 billion with First Republic Bank as part of a US government-backed effort to stabilize the crippled California lender, people with knowledge of the matter said.
Banks, including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Wells Fargo & Co., Morgan Stanley, US Bancorp, Truist Financial Corp. and PNC Financial Services Group Inc. are participating in the discussions. , asking not to be identified as the talks are private. Final deposits are likely to be between $25 billion and $30 billion, people say.
The largest banks, including JPMorgan, Bank of America and Citigroup, will make deposits of $5 billion each, with smaller banks making smaller amounts, the sources said. Details of the rescue, which are still being worked out, could be announced as early as Thursday afternoon, people said. Drafts of the announcement are being circulated to banks and federal agencies, people said.
Representatives for banks, the Federal Reserve, the Federal Deposit Insurance Corporation and the Treasury Department either declined to comment or did not immediately respond to requests for comment. A spokesman for the San Francisco-based First Republic declined to comment.
First Republic’s share price swung sharply on Thursday, dropping 36% early in the day and then rising 28% at noon. They rose 12% at 1:59 pm in New York after several trading pauses due to volatility.
The bank is exploring strategic options, including a possible sale, Bloomberg News reported late Wednesday. The lender’s shares fell sharply after regulatory arrests of other regional lenders Silicon Valley Bank and Signature Bank last week.
First Republic, which specializes in private banking and has created an asset management franchise with approximately $271 billion in assets, has made efforts to differentiate itself from Silicon Valley Bank’s SVB Financial Group. Unlike SVB, whose biggest clients were startups and venture capital firms, First Republic said no single sector accounted for more than 9% of total enterprise deposits.
The Silicon Valley bank crashed into the FDIC on Friday after its tech startup customer base freaked out and withdrew deposits.
First Republic Bank is working with JPMorgan to meet these challenges. On Sunday, the same day that Signature Bank was turned over to regulators, First Republic said it has “further strengthened and diversified its financial position” by securing additional liquidity from the Fed and JPMorgan.
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