US-based private bank and wealth management firm First Republic Bank will receive uninsured deposits totalling up to $30bn from major banks in the US.
Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo will make a $5bn uninsured deposit each into First Republic Bank.
Goldman Sachs and Morgan Stanley will deposit $2.5bn each, and BNY Mellon, PNC Bank, State Street, Truist and U.S. Bank will deposit $1bn each.
The rescue by top US banks will help First Republic Bank survive the growing impact of the financial crisis, triggered by the collapse of Silicon Valley Bank last week.
Recently, Swiss investment bank Credit Suisse borrowed up to $54bn from Switzerland’s central bank to strengthen its liquidity.
First Republic Bank founder and executive chairman Jim Herbert, and CEO and president Mike Roffler said: “We would like to share our deep appreciation for Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, PNC Bank, State Street, Truist, and U.S. Bank.
“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 US banking system.
“In addition, we want to share our sincerest thanks to our colleagues, clients, and communities for their continued and overwhelming support during this period.”
First Republic said that it is accessing the additional liquidity through additional borrowing capacity that builds on certain industry events.
The bank had a cash position of around $34bn as of 15 March 2023, excluding the $30bn of uninsured deposits currently offered by the US banks, with an initial term of 120 days.
Between 10 March and 15 March, the US lender increased its borrowings from the Federal Reserve from $20bn to $109bn, at an overnight rate of 4.75%.
It has also increased its short-term borrowings from the Federal Home Loan Bank by $10bn at a rate of 5.09%, since the closing of business on 9 March 2023.
First Republic said that it is focused on reducing its borrowings and evaluating the composition and size of its balance in the future.
Furthermore, the bank’s Board of Directors has decided to suspend its common stock dividend, during the period of recovery.
