First Republic Bank was under pressure after the collapse of Silicon Valley Bank.
Photo:
Devin Blaskovich for the Wall Street Journal
First Republic Bank FRC -14.84%
said it has supported its finances with additional funding from the Federal Reserve and JPMorgan Chase JPM 2.54%
& Co.
The new financing gives the bank, which was under pressure after the collapse of SVB Financial Corp. last week, $70 billion in unused liquidity. That doesn’t include money First Republic can borrow through a new Fed loan facility designed to help banks with withdrawals.
“First Republic’s capital and liquidity position is very strong and capital remains well above the regulatory threshold for well-capitalized banks,” the bank’s executive chairman and CEO said in a joint statement.
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Silicon Valley Bank collapsed on Friday, becoming the largest bank to fail since the 2008 financial crisis. Join Dana Cimilluca, chief of the Journal of Wall Street’s Financial Industry Bureau and reporter, on Monday, March 13 at 3 p.m. ET Rolfe Winkler for a talk about the bank failure, subsequent regulatory action and what it all means for the technology sector and the overall health of the US economy.
Investors worried last week that First Republic had a similar profile to SVB, which was seized by the government after a bank run. Shares of First Republic were down about 30% since Wednesday, and some customers became fearful of leaving their deposits with the bank. On Sunday, bank executives emailed customers to reassure them about finances.
The drip is the first lifeline for a collection of medium-sized banks that have run into trouble over the past week. Silvergate capital Corp.
announced plans to shut down on Wednesday after betting on crypto clients left it with huge losses. SVB was seized by the government on Friday. New York-based Signature Bank suffered the same fate on Sunday. Those two closures were the second and third largest bank failures in history.
The banking industry has long envied First Republic’s business and stock valuation. Her clients are high net worth individuals and companies mainly on the coasts. Lending revolved around providing huge mortgages to clients like Mark Zuckerberg. Few of those loans have ever gone bad.
The bank’s profits rose in 2022, but the Federal Reserve’s aggressive rate hikes began to weigh on it. The wealthy customers were no longer satisfied with leaving huge sums of money in bank accounts that paid no interest.
Write to Rachel Louise Ensign at [email protected]
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