Eleven US banks, including Bank of America, Citigroup and JPMorgan, have agreed to pay a total of $30 billion in deposits to First Republic, a sign they say of their “trust in the country’s banking system,” according to a joint statement.
“This action by America’s largest banks reflects their trust in First Republic and banks of all sizes, and demonstrates their overall commitment to helping banks serve their customers and communities,” the statement read.
First Republic, founded in 1985 and headquartered in San Francisco, is the 14th largest bank in the US by asset size, with $212 billion in assets as of the end of 2022.
Specially supervised establishment
It has offices mainly in California, but also on the East Coast (New York, Massachusetts, Connecticut, Florida), in the states of Oregon, Washington, and Wyoming. It offers private banking services for individuals and companies and wealth management.
Given the profile of its clientele, the bank is one of the establishments especially watched by investors after the near bankruptcies of Silicon Valley Bank, Signature Bank and Silvergate.
According to the S&P Global Ratings agency, 68% of the deposits stored in the bank are in accounts that exceed $250,000, a limit that is usually guaranteed by the authorities.
Some fear that many clients prefer to deposit their money in banks that a priori do not present a risk of non-payment.
strategic options
The rating agencies S&P Global Ratings and Fitch lowered this Wednesday the rating they give to the company’s debt in the speculative investment category.
“We believe that the risk of deposit flight is high at First Republic Bank despite the actions taken by banking regulators and the fact that the bank is actively increasing its borrowing capacity to mitigate the risk associated with bank failures of the last week”, justifies S&P in a note. .
According to the Bloomberg agency, citing sources familiar with the matter, the bank is currently exploring “strategic options.” It could be a sale or a way to bolster your liquidity.
The bank said on Sunday that it had “strengthened and diversified its liquidity” thanks to facilities offered by the US central bank and JPMorgan Chase.
Source: BFM TV
