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U.S. Banks Bailout First Republic With $30 Billion Of Deposits

A group of 11 banks has agreed to deposit $30 billion U.S. in troubled lender First Republic (FRC) to help shore-up its finances and rally confidence in the American banking system.

Bank of America (BAC), Wells Fargo (WFC), Citigroup (C) and JPMorgan Chase (JPM) are each contributing $5 billion U.S. to First Republic.

Investment banks Goldman Sachs (GS) and Morgan Stanley (MS) are depositing $2.5 billion U.S. And Truist (TFC), PNC (PNC), U.S. Bancorp (USB), State Street (STT) and Bank of New York Mellon (BK) are each depositing $1 billion U.S. with First Republic.

The deposits are obligated to stay at First Republic for at least 120 days, according to an announcement about the Wall Street bailout.

The injection of funds comes after First Republic’s stock has been bludgeoned in recent days following the collapse on March 10 of Silicon Valley Bank (SIVB) and Signature Bank (SBNY) on March 12.

Both Silicon Valley Bank and Signature Bank had a high number of uninsured deposits, as does First Republic, leading to concerns that First Republic could also fail without financial support.

First Republic said previously that it had more than $70 billion U.S. in liquidity, not counting additional funds it could possibly raise from the Federal Reserve’s Bank Term Funding Program.

On March 16, First Republic said that it had about $34 billion U.S. in cash on hand, not counting the $30 billion U.S. in new deposits it is receiving. The bank also suspended its stock dividend earlier this week.

First Republic caters to high-end clients and firms, and its business includes wealth management and residential real estate loans.

The lender reported more than $212 billion U.S. of assets at the end of last year and generated $1.6 billion U.S. in net income during 2022.

First Republic’s stock has fallen 80% over the last 12 months to trade at $34.27 U.S. per share. The share price has declined 50% in the last five trading sessions.