Article Image

IPFS News Link • Central Banks/Banking

Federal Agencies: First Republic Bank Rescued with $30 Billion Deposited from 11 Banks


The $30 billion deposit is far more than previous negotiations indicated. According to the Wall Street Journal, "JPMorgan, Citigroup, Bank of America, and Wells Fargo were in earlier talks to deposit $5 billion of their own money each into the lender." But the final rescue package included 11 banks and $30 billion in capital to prevent the bank from collapsing.

The banks that have come to the rescue are Bank of America, Wells Fargo, Citigroup, and JPMorgan Chase, which will contribute about $5 billion apiece. Goldman Sachs and Morgan Stanley will deposit about $2.5 billion, according to the banks' press release. Truist, PNC, U.S. Bancorp, State Street, and Bank of New York Mellon will deposit about $1 billion each. The massive deposits are obligated to remain in First Republic for at least 120 days, according to CNBC.

The bank had suffered a downturn in stock price in recent days, fueled by the collapse of Silicon Valley Bank and Signature Bank over the weekend. An underlying factor that caused the initial Silicon Valley Bank run was the FED's interest rate hikes due to President Joe Biden's soaring inflation. Due to the interest rate hikes to tamp inflation, borrowing money became more expensive for businesses, causing business depositors to access their savings at the institution.