The biggest U.S. banks plan to inject as much as $30 billion into First Republic Bank in an effort to bolster the beleaguered lender as concern about the financial system spreads.
The biggest U.S. banks plan to inject as much as $30 billion into First Republic Bank in an effort to bolster the beleaguered San Francisco lender as concern about the financial system spreads, according to three bank executives with knowledge of the move.
JPMorgan Chase, Bank of America and Citigroup are each expected to inject $5 billion, with other institutions providing smaller amounts. The executives said various drafts of an announcement continued to circulate on Thursday but that the arrangements were nearly finalized. The other banks are Wells Fargo, Morgan Stanley, USBancorp, PNC Financial and Truist.
More than two-thirds of First Republic’s domestic deposits exceed the FDIC’s insurance limit of $250,000 per person, per bank. Investors’ uncertainty over the bank’s prospects prompted Fitch Ratings to downgrade its credit rating on Wednesday. The rescue package announced Sunday for Silicon Valley Bank and Signature Bank guaranteed all the lenders’ deposits, even for the uninsured. Separately, the Fed set up a facility to make cash loans available to all banks for up to a year in exchange for safe collateral, which would theoretically allow the lenders to handle deposit withdrawals of any amount.
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