A group of financial institutions have agreed to deposit $30 billion in First Republic Bank in what is intended to be a sign of confidence in the banking system, the banks announced Thursday afternoon.
Bank of America, Wells Fargo, Citigroup and JPMorgan Chase will contribute about $5 billion each, while Goldman Sachs and Morgan Stanley will deposit about $2.5 billion, the banks said in a news release. Truist, PNC, US Bancorp, State Street and Bank of New York Mellon will deposit about $1 billion each.
«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 group said in a statement. .
Deposits would be required to remain with First Republic for at least 120 days, sources told CNBC’s David Faber. Shares in regional banks initially fell on Thursday but reversed higher after reports by Faber and others about the development of the deposit plan.
The news comes after First Republic shares plunged in recent days, triggered by the collapse of Silicon Valley Bank last Friday and Signature Bank over the weekend. Both banks had large amounts of uninsured deposits, as did First Republic, raising concerns that customers would withdraw their money. New deposits from major banks are not insured.
First Republic shares, which closed at $115 a share on March 8, traded below $20 at one point Thursday. The stock was halted repeatedly during the session and rose as high as $40 a share at one point, up more than 20% on the day.