A First Republic Bank branch in New York, US, on Friday, March 10, 2023.
Jeenah Moon | Bloomberg | Getty Images
A group of financial institutions are in talks to deposit roughly $20 billion in First Republic, sources told CNBC’s David Faber. The group includes Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup and others, the sources said.
The deal is not done yet, the sources said. The plan does not call for an of acquisition of First Republic. The sources noted the amount was a moving target. Other reports said the deposit boost could be as much as $30 billion.
The deposit breakdown of the plan could be billions from each participating bank, meant to be a sign of confidence in the banking system.
The news comes after First Republic’s stock has been pummeled in recent days, sparked by the collapse of Silicon Valley Bank last Friday and Signature Bank over the weekend. Both of those banks had a high number of uninsured deposits, as did First Republic, leading to concern that customers would pull their money out.
First Republic’s stock, which closed at $115 per share on March 8, traded below $20 at one point on Thursday. The stock was halted repeated shortly after the news broke and rose to $38 per share, up more than 20% on the day.
The bank had said on Sunday that it had more than $70 billion in availability liquidity, not counting additional funds it could possibly raise from the Federal Reserve’s Bank Term Funding Program, but that was not enough to keep investors from dumping the stock.
The deposits from the larger bank would add to that liquidity if the plan comes to fruition.
In the great financial crisis, several struggling banks were bought for cheap by the larger firms in an effort to help calm the banking system. However, the unrealized losses on First Republic’s bond portfolio due to last year’s rapid rise in interest rates have made an acquisition unappealing, the sources said.
First Republic typically caters to high end clients and firms, and its business includes wealth management and residential real estate loans. The company reported more than $212 billion assets at the end of December and generated more than $1.6 billion in net income last year.