Citigroup, Goldman Sachs and nine other major banks said Thursday they would send a combined $30 billion to support First Republic Bank, a California-based regional bank that has been troubled by the Silicon Valley bank’s sudden collapse.
Bank of America, Citigroup, JPMorgan Chase and Wells Fargo plan to contribute $5 billion each, while Goldman Sachs and Morgan Stanley will raise $2.5 billion each. BNY Mellon, PNC Bank, State Street, Truist and US Bank are adding $1 billion each.
In a joint statement on Thursday, the banks said their infusion of cash shows “confidence in First Republic and banks of all sizes”.
Federal regulatory agencies, including the U.S. Treasury Department and the Federal Deposit Insurance Corporation, said in a statement on Thursday that “support from a group of major banks is very welcome.”
They added that “this shows the stability of the banking system.”
First Republic Bank saw its share price fall 36% in early trading Thursday before its share price rose 10% this week. Moody’s downgraded First Republic’s credit rating this week, noting that the bank is “more sensitive to quick and large withdrawals from investors” than its peers. First Republic has also seen its market value drop from $22 billion in January to $7 billion year-to-date.
As with Silicon Valley Bank, a significant portion of First Republic’s deposits are uninsured, making it prone to borrowing from sketchy customers.
First Republic’s new capital will come on top of additional cash First Republic said earlier this week it received from the Federal Reserve and JPMorgan Chase.
First Republic did not respond to a request for comment. With $212 billion in assets under management, First Republic has approximately 7,200 employees.
CEO Mike Roffler said earlier this week that the bank has “very strong” capital, citing $70 billion available for operations.
Pacific Western, Zions, Western Alliance and other regional banks saw their shares fall this week after a sudden takeover of SVB by financial regulators spooked investors. Most of those stocks recovered on Tuesday after President Biden assured the Americans they can trust the US banking system and regulators have promised that all deposits at SVB will be available to customers.
Treasury Secretary Janet Yellen on Thursday tried to eliminate his worries In a speech to the Senate Finance Committee on the stability of US banks.
“I can assure members of the committee that our banking system is sound and Americans can feel confident that their deposits will be there when they need them,” he told lawmakers. “This week’s actions demonstrate our strong commitment to ensure that depositor savings remain strong and depositor savings safe.”