Bank of the First Republic FRC -14.84%
said it strengthened its finances with additional funding from the Federal Reserve and JPMorgan Chase JPM 2.54%
The new funding gives the bank, which was under pressure after the collapse of SVB Financial Corp. last week, $70 billion of idle cash. That doesn’t include money First Republic can borrow through a new Fed lending facility designed to help banks deal with withdrawals.
“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” the bank’s executive chairman and chief executive said in a joint statement.
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Investors grew concerned last week that First Republic had a similar profile to SVB, which was seized by the government after a bank run. First Republic shares had fallen about 30% since Wednesday, and some customers had grown nervous about leaving their deposits in the bank. On Sunday, bank executives emailed customers to reassure them about its finances.
The infusion is the first such lifeline for a set of mid-sized banks that have run into trouble over the past week. Silvergate Capital Corp.
Wednesday announced plans to close after its crypto client bet left it with huge losses. The SVB was seized on Friday by the government. New York-based Signature Bank suffered the same fate on Sunday. These two closures were the second and third largest bank failures in history.
First Republic businesses and stock market valuation have long been the envy of the banking industry. Its clients are wealthy individuals and businesses mainly on the coasts. His lending business involved making huge mortgages to clients such as Mark Zuckerberg. Few of these loans have gone bad.
The bank’s earnings rose in 2022, but the Federal Reserve’s aggressive rate hikes have begun to squeeze it. His wealthy clients were no longer content to leave huge sums of money in interest-free bank accounts.
Write to Rachel Louise Ensign at Rachel.Ensign@wsj.com
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