A First Republic bank branch in Oakland, California on March 16, 2023 ( GETTY IMAGES NORTH AMERICA/JUSTIN SULLIVAN )
Eleven American banks have agreed to pay a total of $ 30 billion in deposits in the struggling First Republic, a sign they say of their “confidence in the banking system” of the country, said a joint statement.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and demonstrates their general commitment to helping banks serve their customers and communities,” the document reads.
First Republic is the 14th largest US bank by asset size.
It found itself in difficulty after the close failures of Silicon Valley Bank, Signature Bank and Silvergate, banks which had bet on particular sectors of activity because it mainly serves a wealthy clientele.
Observers feared that many customers would prefer to move their money to larger establishments that a priori pose no risk of bankruptcy because they are too big for regulators to let them close, and that First Republic could be the next domino to fall.
In one week, its action lost 73% on Wall Street.
Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, the country’s four largest banks by asset size, are expected to contribute $5 billion each.
The investment banks Goldman Sachs and Morgan Stanley must pay 2.5 billion each while BNY Mellon, PNC Bank, State Street, Truist and US Bank must pay 1 billion.
After the failures of Silicon Valley Bank and Signature Bank, “a small number” of banks faced large withdrawals from accounts where more than $ 250,000 were deposited, the limit usually guaranteed by the authorities, acknowledge the banks in the press release .
But “the banking system has solid credit, abundant liquidity, significant capital and strong profitability. Recent events have not changed this situation,” they add.
