JP Morgan Chase, Bank of America, Citi Group, and Wells Fargo are contributing five billion deposits each and Goldman Sachs and Morgan Stanley are giving 2.5 billion a piece, the total adds up to 3 billion dollars.
Why are they doing this? Well, here’s a statement from the banks.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities.”
First Republic has been exploring strategic options including a possible sale. The news comes after first republic’s stock has been pummeled in recent days, sparked by the collapse of Silicon Valley Bank.
SVB, Signature Bank, and first republic all had a high number of uninsured deposits leading to concern that customers would pull their money out. The new deposits from the major banks are uninsured. Yesterday First Republic said that it had about $34 billion in cash not counting the new $30 billion in deposits. They had borrowed tens of billions of dollars from the Federal Reserve and the Federal Home Loan Bank over the past week but the bank says daily deposit outflows have now “slowed considerably,”.
First Republic typically caters to high-end clients and firms, and its business includes wealth management and residential real estate loans. The company reported more than $212 billion in assets at the end of December and generated more than $1.6 billion in net income last year.
