JPMorgan and Other Banks Reportedly Eye Expanding First Republic Support

Big banks are reportedly considering expanding their efforts to support First Republic Bank.

After 11 banks deposited $30 billion into the bank Thursday (March 16), they are now considering other options that include investing in the bank, the Wall Street Journal (WSJ) reported Monday (March 20).

A sale of the bank or an infusion of outside capital are also being considered by First Republic, according to the report.

Reached by PYMNTS, a First Republic Bank spokesperson declined to comment on the report but provided a statement.

“Following Thursday’s uninsured deposit of $30 billion by the 11 largest banks in the country, together with cash on hand, First Republic Bank is well positioned to manage short-term deposit activity,” the statement said. “This support reflects confidence in First Republic and its ability to continue to provide unwavering exceptional service to its clients and communities.”

According to the WSJ report, the banks’ discussions are still in the early stages, and the situation is fluid.

This news comes as First Republic Bank’s stock reached an all-time low, falling another 17% Monday morning and losing more than 80% of its value in March, according to the report.

While depositors’ withdrawals of funds from the bank slowed after the 11 banks announced their deposits, First Republic still faces a gap in its balance sheet, the report said.

Plus, investors and customers remain concerned about the bank’s future because a large share of its deposits are uninsured — as was the case with the now-failed Silicon Valley Bank, per the report.

The 11 banks aim to boost confidence in the banking system by stabilizing First Republic, the report said.

The deposits announced Thursday included $5 billion each from Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, $2.5 billion each from Goldman Sachs and Morgan Stanley, and $1 billion each from BNY Mellon, PNC Bank, State Street, Truist and U.S. Bank.

“The actions of America’s largest banks reflect their confidence in the country’s banking system,” the banks said Thursday in a joint press release. “Together, we are deploying our financial strength and liquidity into the larger system, where it is needed most. Smaller- and medium-sized banks support their local customers and businesses, create millions of jobs and help uplift communities.”

The move was praised by House Financial Services Committee Chairman Patrick McHenry and in a joint statement issued on behalf of the U.S. Department of the Treasury, Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC).

However, as PYMNTS reported Saturday, there is a Catch-22 in place. If liquidity injections become commonplace to shore up confidence, the fact that banks are furiously backstopping one another may be a signal event that erodes confidence.