First Republic Bank has a branch at 1200 State St. in Santa Barbara.
By COLE LAUTERBACH
THE CENTER SQUARE
(The Center Square) – Without the help of taxpayer funds, embattled regional lender First Republic Bank saw an injection of money Thursday from the nation’s largest banks – likely saving the San Francisco-based bank from insolvency.
A joint statement from a quartet of Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg, and Acting Comptroller of the Currency Michael J. Hsu, confirmed the transfer.
“Today, 11 banks announced $30 billion in deposits into First Republic Bank,” they said. “This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system.”
As first reported by The Wall Street Journal, JPMorgan Chase, Citigroup, Bank of America and Wells Fargo will send $5 billion to First Republic, which has a branch at 1200 State St. in Santa Barbara. Sending smaller amounts are Morgan Stanley and Goldman Sachs, U.S. Bancorp, PNC Financial Services Group and Truist Financial, the paper said.
Free Republic’s stock price plummeted Thursday on news of the bank seeking a sale but the injection of funds gave investors confidence, bouncing the bank’s price back up to more than $34 when markets closed at 4 p.m. Eastern.
Credit rating agencies lowered the bank’s bond ratings to speculative, or “junk” status shortly after.
A spokesman for the bank wasn’t immediately available to comment on the infusion of cash Thursday afternoon.
The regional bank’s scare is the latest in a handful of mid-size lenders nearing or falling into insolvency, leaving account holders with more than the FDIC-insured $250,000 fearful they’d lose those funds after a run on the bank.
Tech-centric Silicon Valley Bank fell into insolvency last week after being forced into heavy losses to maintain liquidity when customers began pulling money from the bank. The FDIC took over the lender, announcing it would take additional steps to make uninsured funds whole.
New York City’s Signature Bank met the same fate last Sunday. The FDIC was named receiver and has transferred the bank’s holdings to Signature Bridge Bank, N.A.
