First Republic Bank, amidst a crisis of confidence from investors and customers, is set to receive a $30 billion lifeline from a group of America's largest banks, including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and Truist. The Treasury Department welcomed this support, stating it demonstrates the banking system's resilience.
Struggling Bank Gains Confidence Boost with Infusion
The $30 billion cash infusion will provide the struggling San Francisco-based lender with much-needed funds to meet customer withdrawals and restore confidence in the US banking system during a challenging period for lenders. A First Republic spokesman declined to comment on the matter.
Market Volatility: First Republic Shares Rise
First Republic's shares experienced significant volatility on Thursday, halted multiple times but ending the day up more than 10%. The bank's issues highlight continued concerns about the banking system following the collapse of Silicon Valley Bank and Signature Bank.

Credit Rating Downgrade Reflects Deposit Concerns
Fitch and S&P Global Ratings downgraded First Republic Bank's credit rating on Wednesday, citing concerns that depositors could withdraw their cash. Many regional banks, including First Republic, hold large uninsured deposits above the $250,000 FDIC limit. First Republic has a considerable 68% of total deposits that are uninsured, according to S&P Global.
High Liability-to-Deposit Ratio Adds Investor Risk
First Republic's unusually high 111% liability-to-deposit ratio, as reported by S&P Global, means the bank has lent out more money than it has in deposits from customers, making it a particularly risky investment. This has led to customers withdrawing their money and putting it elsewhere, creating an issue for the bank as it must borrow money or sell assets to pay customers their deposits in cash.
BREAKING: JPMorgan, Bank of America, Wells Fargo, Citi, and more to deposit $30 billion into First Republic Bank $FRC.
— Paryte (@Parytecom) March 16, 2023
Federal Reserve's Loan System Insufficient for Investors
The Federal Reserve established a loan system to prevent regional banks from failing after the collapse of Silicon Valley Bank. This facility allows banks to offer their Treasury bonds as collateral for one-year loans in exchange for the value the banks paid for the Treasuries. However, this extraordinary federal intervention needs to be revised to satisfy investors. First Republic announced a deal with JPMorgan on Sunday for quick cash access if needed and claimed to have $70 billion in unused assets to cover customer withdrawals.