World news

Banks working on rescue plan for First Republic, reports say

Ken Sweet, Associated Press

A group of Wall Street banks is planning a rescue package of at least 20 billion US dollars (£16.5 billion) for First Republic Bank, sources have told The Associated Press.

The rescue package comes as San Francisco-based First Republic has been battered by investors and worries have grown that the midsized bank might be the next to fail, after Silicon Valley Bank and Signature Bank.

Sources familiar with the matter said that JPMorgan Chase, Citigroup, Wells Fargo and Goldman Sachs are part of the group of banks pulling together the package.

It is likely to consist of 20 billion dollars in deposits and capital for First Republic, but it might be as high as 30 billion dollars.

The sources spoke on the condition of anonymity because the package was still being developed.

A First Republic spokesman declined to comment on the reports.

First Republic Bank’s stock has faltered as customers began pulling their deposits out. But it was up more than 3% on Thursday after reports of the recue package surfaced.

The news comes after the collapse last week of Silicon Valley Bank, which was the second biggest bank failure in US history after the demise of Washington Mutual in 2008.

The shuttering of Silicon Valley Bank on Friday and of New York-based Signature Bank two days later has revived bad memories of the financial crisis that plunged the United States into the Great Recession of 2007-2009.

Over the weekend the federal government, determined to restore public confidence in the banking system, moved to protect all the banks’ deposits, even those that exceeded the FDIC’s 250,000 dollars limit per individual account.

The White House had no comment on Thursday on the reports of the rescue package for First Republic Bank, which has more than 200 billion dollars in assets.