First Republic Bank rescued with $30 billion deposited by 11 banks

First Republic Bank was bailed out with $30 billion in deposits from 11 banks after facing falling stock prices and fleeing depositors, the Treasury, Federal Reserve, Federal Deposit Insurance Corp said. and the Office of the Comptroller of the Currency in a joint statement. statement Thursday.

The $30 billion deposit is far more than previous negotiations indicated. According to the wall street journal, “JPMorgan, Citigroup, Bank of America and Wells Fargo were in earlier talks to each deposit $5 billion of their own money with the lender.” But the final bailout included 11 banks and $30 billion in capital to keep the bank from collapsing.

The bank had suffered a share price decline in recent days, fueled by the collapse of Silicon Valley Bank and Signature Bank over the weekend. An underlying factor driving Silicon Valley Bank’s initial run was the FED’s interest rate hikes due to President Joe Biden’s soaring inflation. Due to interest rates rising to curb inflation, borrowing money has become more expensive for businesses, forcing commercial depositors to access their savings with the institution.

The bank had said on Sunday that it had more than $70 billion in available cash, not including any additional funds it could potentially raise from the Federal Reserve’s term funding program, but that was not enough to prevent investors from dumping the stock.