A group of banks is in talks to inject $30 billion into First Republic, sources say

A group of financial institutions is in talks to put in $30 billion First Republic This is meant to be a sign of confidence in the banking system, sources told CNBC’s David Faber.

The deal is still ongoing, the sources said, and the amounts are a moving target. The plan does not include an acquisition of First Republic.

Bank of America, Wells Fargo, Citigroup And JPMorgan Chase will contribute about $5 billion a piece while Goldman Sachs And MorganStanley will deposit around $2.5 billion, the sources said. shop steward, pnc, U.S. Bancorp, federal road And Bank of New York will each deposit about $1 billion.

The deposits would be required to stay with First Republic for at least 120 days.

The news comes after First Republic shares have fallen in recent days due to the collapse of Silicon Valley Bank last Friday and signature bank over the weekend. Both banks, like First Republic, had high levels of uninsured deposits, leading to concerns that customers would withdraw their money.

First Republic stock, which closed at $115 a share on March 8, was trading below $20 at one point Thursday. The stock was repeatedly halted shortly after the news broke, at times soaring to $40 a share, up more than 20% on the day.

The bank had said Sunday that it had more than $70 billion in available liquidity, not counting additional funds it could potentially raise from the Federal Reserve’s Bank Term Funding Program, but that wasn’t enough to say discourage investors from dumping the stock.

The deposits from the larger banks would add to that liquidity if the plan goes ahead.

During the Great Financial Crisis, several ailing banks were bought cheaply by the larger corporations to calm the banking system. However, the unrealized losses on First Republic’s bond portfolio due to the rapid rise in interest rates over the past year have made a takeover unappealing, the sources said.

The discount, which would affect the bank’s held-to-maturity bond portfolio, would amount to a roughly $25 billion hole in First Republic’s balance sheet, the sources said.

First Republic typically caters to high-end clients and firms, and its business spans wealth management and home loans. The company reported more than $212 billion in assets at the end of December and posted net income of more than $1.6 billion last year.

The bank declined to comment on this story.

Source : www.cnbc.com

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