Foreign
Several large banks rescue First Republic Bank with $30 billion US deposit
Deposits from big banks offer rescue package to lender
First Republic Bank received $30 billion US in deposits from several big banks, including JPMorgan Chase & Co, Citigroup, Bank of America Corp, Wells Fargo & Co, Goldman Sachs Group, Morgan Stanley, and others, according to a statement released on Thursday by the banks. This move is part of a rescue package for the struggling lender.
Shares recover after tumbling down
The news had a significant impact on the stock of First Republic Bank. The shares were last up almost six per cent at $32.92 US on a volatile trading day. The stock had tumbled down by 36 per cent earlier in the day, but reports of the rescue plan sent them up as much as 40 per cent. The shares have lost two-thirds of their value in the past seven days and are down over 65 per cent month-to-date.
$70bn funds at disposal after round of financing
On Sunday, a $70 billion US funding boost was raised through JPMorgan Chase & Co, which gave First Republic access to funds. However, it failed to calm investors as concerns grow about the impact of the recent banking industry’s fallout.
Government offers a helping hand
The rescue effort was initiated by banks but had strong backing and encouragement from the government, according to a reliable source. The U.S. Treasury Department, Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency confirmed the deposits in a joint statement on Thursday.
About First Republic Bank
First Republic Bank, founded in 1985, had $212 billion US in assets and $176.4 billion US in deposits by the end of 2020, according to the company’s annual report. The bank had around 70 per cent of uninsured deposits – this is above the median of 55 per cent for medium-sized banks and the third highest after Silicon Valley Bank and Signature Bank, according to a Bank of America note.
PacWest Corp in talks for liquidity boost
In additional news, Reuters reported on Thursday that PacWest Corp is in talks with investment firm Atlas SP Partners regarding a liquidity boost.
Credit: https://www.cbc.ca/news/business/first-republic-bank-rescue-30-billion-1.6781237
