Eleven of the biggest U.S. banks Thursday announced a US$30 billion rescue package for First Republic Bank in an effort to prevent it from becoming the third to fail in less than a week and head off a broader banking crisis.
San Francisco-based First Republic serves a similar clientele as Silicon Valley Bank, which failed last week after depositors withdrew about US$40 billion in a matter of hours. New York's Signature Bank was shuttered on Sunday. It appears that First Republic, which had deposits totaling US$176.4 billion as of Dec. 31, was facing similar issues.
The rescue package brought back memories of the 2008 financial crisis, when banks collectively came to the aid of weaker banks in the early days of the crisis. Banks then bought each other in hurried deals in order to keep the crisis from spreading further. As part of the aid package, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have agreed to each put US$5 billion in uninsured deposits into First Republic. Morgan Stanley and Goldman Sachs will deposit US$2.5 billion each into the bank. The remaining US$5 billion would consist of US$1 billion contributions from BNY Mellon, State Street, PNC Bank, Truist and US Bank.
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