March17(Agencies) A consortium of 11 US private banks, including Bank of America, Citigroup and JPMorgan Chase, announced to rescue local lender by depositing $30 billion to bolster the system following failures of three midsized lenders in the last week.
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes,” the group said in a joint statement.
“Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most,” the banks said.
Shares of First Republic reversed earlier losses to close 10 percent higher on Wall Street Thursday.
“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” said leaders of the Treasury Department, US Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency in a joint statement. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo each are making a $5 billion uninsured deposit in First Republic, while Goldman and Morgan Stanley will put in $2.5 billion each.
In a statement, First Republic founder Jim Herbert and CEO Mike Roffler said the “collective support strengthens our liquidity position… and is a vote of confidence for First Republic and the entire US banking system.”
The action comes on the heels of emergency measures taken late Sunday by the Federal Reserve and other US regulators to assure all depositors of two failed banks, Silicon Valley Bank and Signature Bank.
On Thursday, the Fed said it has lent US banks close to $12 billion under a new one-year lending program unveiled Sunday as authorities moved to ease stress on the financial system.
The total outstanding amount of all advances under the Bank Term Funding Program reached $11.9 billion by Wednesday, the central bank said.
In its earlier statement, the Fed said it was making additional funding available “to help assure banks have the ability to meet the needs of all their depositors.”
Data made available Thursday showed the vastness of the emergency assistance, with the Fed drawing an additional $152 billion in short-term borrowing for banks from its standing loan window, a dramatic increase against the roughly $5 billion from the previous week.
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