“Although the deposits have alleviated concerns about the situation of First Republic Bank (First Republic Bank) or FRB, but the bank still has to pay interest on such deposits. which is charged at the current rate and will affect the bank’s interest income and because FRB that have poor financial standing The bank may eventually consider divestment,” said Art Hogan, chief market analyst at B. Riley Wealth Management.
The FRB was established in 1985 with $212 billion in assets and $1764 billion in deposits as of December 31, 2022.
In addition, FRB borrowed money fromUS Federal Reserve (Fed) an amount of $109 billion between March 10-15
the media reported that There are a number of people behind the scenes to persuade the major US banks to inject a total of $30 billion to add liquidity to the FRB.
Part of the deal was US Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell and CEO Jamie Dimon of JPMorgan Chase.
according to the big bank agreement inwall streetBank of America, Wells Fargo, Citigroup and JPMorgan will each deposit $5 billion in FRBs.
Goldman Sachs and Morgan Stanley will deposit $2.5 billion each. True East Financial, PNC, US Bankcorp, State Street and Bank of New York Mellon will each deposit $1 billion in FRBs.
“The fact that major banks in the United States are united in injecting a total of 30 billion dollars this time. This reflects that the bank has confidence in the FRB and in banks of all sizes. as well as reflecting the commitment to help banks continue to provide services to customers,” the major Wall Street bank said in a statement.
However, although the agreement eased concerns in the market and didFRB share price it rebounded yesterday But investors sold the stock down 20% on the day, dragging bank stocks down too.
FRB has the third highest volume of non-government deposits, behind Silicon Valley Bank and Signature Bank, which were previously closed. As a result, many clients have shifted their deposits away from FRBs to larger banks.