Eleven of the largest banks in the US, including Bank of America, Citigroup, and JPMorgan Chase, have come together to deposit $30 billion into First Republic. This move comes as a means of protecting the regional lender from collapse amid fears that it could be the next in line after the failures of three midsized lenders in the last week.
First Republic is the 14th largest US bank by assets, with $212 billion at the end of 2022. The bank is headquartered in San Francisco and is also present on the East Coast, including in New York and Florida, as well as in western states such as Washington.
The bank’s clientele is mainly made up of affluent customers, making it a popular choice for private banking and wealth management. The majority of its accounts hold deposits of more than $250,000, which is automatically guaranteed by US regulators. This has kept First Republic under scrutiny after the failures of other midsized banks, including Silicon Valley Bank and Signature Bank.
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The recent turmoil in financial markets has led to concerns that First Republic’s customers might flee to the relative safety of big, well-capitalized Wall Street banks. However, the deposit from the consortium of 11 US private banks, along with the confidence expressed by the leaders of the Treasury Department, US Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, is likely to provide some relief. First Republic founder Jim Herbert and CEO Mike Roffler said the “collective support strengthens our liquidity position
The move by the consortium of US private banks to deposit $30 billion into First Republic is being seen as a significant vote of confidence in the bank and the US banking system as a whole. It is hoped that this show of support will help to shore up First Republic and prevent it from becoming the next domino to fall in the current climate of financial instability.