A group of 11 financial institutions promised to deposit a total of $30 billion in First Republic Bank, an effort meant to signal the strength of the financial market and the sector’s confidence it will weather the current storm, NBC News reports.
The Platinum Donors, who contributed $5 billion, include Bank of America, Wells Fargo, Citigroup and JPMorgan Chase. Gold Donors, at $2.5 billion, are Goldman Sachs and Morgan Stanley. Truist, PNC, U.S. Bancorp, State Street and Bank of New York Mellon are the Silver tier at around $1 billion each. The money will stay with First Republic for at least 120 days. First Republic still has $70 billion in liquid assets of its own, but investors started dumping the stock, which went from $115 last week to close around $34 Thursday.
First Republic is an unusual bank, with a specialty dealing with high-net-worth individuals. A run on the bank by depositors seeking cash could cripple the institution, and it would further shake up a tenuous industry, so having fellow financial institutions reinforce federal insurance makes sense on a number of levels. Stabilizing First Republic means stabilizing First Republic’s stock price, which will have calming effects on stocks within the same category, with will prevent panicked depositors which thereby stops a run on their reserves.