Eleven large U.S. banks are making uninsured deposits totaling $30 billion into First Republic Bank.
The move ensures First Republic has the liquidity it needs, reflects the 11 banks’ confidence in that bank and in banks of all sizes, and shows the importance of regional, midsize and small banks, the 11 banks said Thursday (March 16) in a joint press release.
Of the 11 banks, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo each deposited $5 billion. Goldman Sachs and Morgan Stanley both deposited $2.5 billion and BNY Mellon, PNC Bank, State Street, Truist and U.S. Bank deposited $1 billion each.
“The actions of America’s largest banks reflect their confidence in the country’s banking system,” the release said. “Together, we are deploying our financial strength and liquidity into the larger system, where it is needed most. Smaller- and medium-sized banks support their local customers and businesses, create millions of jobs and help uplift communities.”
This news comes one day after reports that the embattled First Republic Bank was considering a sale as well as options to enhance its liquidity.
Those reports followed the bank’s downgrading this week by Fitch Ratings and S&P Global Ratings amid the banking industry’s ongoing turmoil.
First Republic Bank said in a Thursday press release that the uninsured deposits from the 11 banks reflect confidence in First Republic and its ability to continue providing service.
“Their collective support strengthens our liquidity position, reflects the ongoing quality of our business, and is a vote of confidence for First Republic and the entire U.S. banking system,” First Republic Founder and Executive Chairman Jim Herbert and CEO and President Mike Roffler said in the release.
The bank added in the release that it had obtained additional liquidity through additional borrowing capacity, that insured deposits have remained stable from March 8 through March 15 and that daily deposit flows have slowed “considerably.”
The banks’ action was also welcomed by a joint statement issued on behalf of the U.S. Department of the Treasury, Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC).
“Today, 11 banks announced $30 billion in deposits into First Republic Bank,” the statement said. “This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system.”