- First Republic Bank (FRC) will receive a $30 billion lifeline from a group of America's largest banks, including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), and Truist (TFC), to address its liquidity woes and meet customer withdrawals. First Republic shares closed up nearly 10% after the news. The stock had been down more than 30% earlier in the day.
- With the third-highest rate of uninsured deposits among U.S. banks, First Republic Bank has been struggling to maintain its customer base and shore up investor confidence. Despite the Federal Reserve's efforts to support banks through asset swaps, the bank's stock has plummeted over 75% in March and its debt has been downgraded by credit rating agencies. Additionally, First Republic has an unusually large 111% liability-to-deposit ratio.
Why it matters
The $30 billion infusion from major banks is expected to stabilize First Republic Bank's deposit base and buttress confidence in the U.S. banking system. The move is also critical for the struggling San Francisco lender to meet customer withdrawals and prevent a potential collapse that could have a ripple effect on the financial market.
