$30 billion rescue of First Republic Bank announced by major banks

A A group of banks announced Thursday that First Republic Bank would be saved by $30 billion as part of efforts for market stability.

The rescue covers uninsured deposits from 11 banks, ranging in size from $1 billion up to $5 billion, according to a joint statement.

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Bank of America, Citigroup Chase, JPMorgan Chase and Wells Fargo are some of the banks that are helping to stabilize First Republic Bank.

“Bank of America, Citigroup, JPMorgan Chase and Wells Fargo announced today they are each making a $5 billion uninsured deposit into First Republic Bank. Goldman Sachs and Morgan Stanley are each making an uninsured deposit of $2.5 billion, and BNY Mellon, PNC Bank, State Street, Truist and U.S. Bank are each making an uninsured deposit of $1 billion,” The announcement was made by the banks.

“The actions of America’s largest banks reflect their confidence in the country’s banking system. Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most. Smaller- and medium-sized banks support their local customers and businesses, create millions of jobs and help uplift communities. America’s larger banks stand united with all banks to support our economy and all of those around us,” The joint statement continued.

Janet Yellen (Treasury Secretary), Jerome Powell, Federal Reserve Chairman, FDIC Chairman Martin J. Gruenberg and Michael J. Hsu, acting Controller of the Currency, welcomed the announcements from the banks in a joint declaration.

“Today, 11 banks announced $30 billion in deposits into First Republic Bank. This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” The statement was joint.

A Bloomberg A Thursday report suggested that the federal government was coordinating the rescue after the regional bank lost nearly 71% of its value this week.

Throughout the week, President Biden’s administration has maintained that “the banking system is safe,” Janet Yellen, Treasury secretary, testifies before the Senate Banking Committee regarding the banking system “remains sound and that Americans can feel confident that their deposits will be there when they need them.”

First Republic Bank’s stock rose after its value had been declining for the past week due to earlier reports about the planned rescue. While the stock seems to be leveling off as a result of the reports cooling, it is still above Wednesday’s closing market. The stock traded on Thursday, with an immediate 35% drop in price after a week of continuing bleeds.

First Republic Bank attempted to calm concerns Sunday by announcing that it had “diversified its financial position through access to additional liquidity from the Federal Reserve Bank and JPMorgan Chase & Co,” Along with claiming it had $70 Billion in unused liquidity. The Sunday announcement came just days after Silicon Valley Bank failed and Signature Bank was seized.

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In the wake of the collapse at Silicon Valley Bank, market uncertainty has created panic in regional banks such as First Republic Bank and other financial institutions like Credit Suisse.

Credit Suisse’s shares also fell amid worries about its liquidity. The bank’s stock price plummeted after the Saudi National Bank, its largest lender, announced that it would no longer provide any assistance to the bank. Credit Suisse announced Thursday that it will receive $53.7 billion from Swiss National Bank. Credit Suisse shares rebounded following two days of decline after the bank confirmed that it received $53.7 billion from Swiss National Bank.