The nation’s largest banks threw sinking First Republic a $30 billion lifeline on Thursday to save the troubled lender after the collapse of two other regional banks.
JPMorgan Chase, Citigroup, Bank of America and Wells Fargo will each contribute $5 billion of deposits as part of the deal, the banks said in a joint press release.
Morgan Stanley and Goldman Sachs will each contribute $2.5 billion, while BNY Mellon, PNC Bank, State Street, Truist and US Bank will pour in $1 billion each.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” the banks said in a joint statement.
“Regional, midsize and small banks are critical to the health and functioning of our financial system,” the statement added.
The rescue deal was announced as regulators and bank officials look to bolster confidence in the banking sector following last weekend’s collapse of Silicon Valley Bank and Signature Bank, and concerns about Credit Suisse’s survival.
The implosion of SVB and Signature Bank — the second- and third-largest bank failures in US history, respectively — led spooked customers to shift their money to bigger lenders that are considered “too big to fail,” including Bank of America. The bank reportedly saw inflows of more than $15 billion this week.
First Republic’s stock had plunged nearly 60% since Monday and more than 70% since the start of the year. The shares rose 10% after the rescue plan was announced.
“Short sellers are attacking banks they think are weak, unfortunately First Republic has not done a very good job of pushing back. So the hedge funds keep attacking,” Christopher Whalen, chairman at Whalen Global Advisors, told Reuters.
First Republic had about $213 billion in assets through the end of last year. The bank, whose credit was cut to junk by agencies S&P Global Ratings and Fitch Ratings, is known for catering to wealthy clients and businesses on the coasts.
The Post reached out to First Republic for comment on the report.
First Republic’s rescue unfolded amid international turmoil caused by questions about the stability of Swiss banking giant Credit Suisse.
The bank’s stock plunged 25% on Wednesday but rebounded from all-time lows after the Swiss National Bank extended a $54 billion lifeline to the troubled lender Thursday.
However, the Zurich-based firm’s survival remained a source of major worry in the US and abroad. Analysts are anxious that its collapse would cause renewed contagion fears in global banking.
The European Central Bank’s decision to hike interest rates by another half percentage point sparked further concern – with “Dr. Doom” economist Nouriel Roubini warning Credit Suisse could collapse by this weekend.
Credit Suisse has teetered on the verge of collapse this week after bank officials warned of “material weaknesses” in its financial reporting over the last two years.