First Republic Bank, facing a crisis of confidence from investors and customers, is set to receive a $30 billion lifeline from a group of America’s largest banks.
“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” the Treasury Department said in a statement Thursday. The major banks include JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Truist. The $30 billion infusion will give the struggling San Francisco lender much-needed cash to meet customer withdrawals and buttress confidence in the US banking system during a tumultuous moment for lenders.
Although not close to SVB’s massive percentage of uninsured deposits , First Republic has a sizable 68% of total deposits that are uninsured, according to S&P Global. That led many customers to exit the bank and put their money elsewhere, creating a problem for First Republic: It has to borrow money or sell assets to pay customers their deposits in cash. To make money, banks use a portion of customers’ deposits to give out loans to other customers.
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