Report: First Republic Could Get Rescue From Banking Giants

America’s largest lenders are reportedly considering a plan to rescue the embattled First Republic Bank.

JPMorgan Chase, Bank of America and Wells Fargo are working together to offer a capital infusion to the struggling bank, the Wall Street Journal (WSJ) reported Thursday (March 15), citing unnamed sources.

Meanwhile, a separate WSJ story Thursday says that executives at the San Francisco-based bank sold nearly $12 million in stock in the months ahead of the current shakeup.

PYMNTS has contacted First Republic for comment on both issues but hasn’t yet received a response. 

News of the effort by the banking giants to save their smaller contemporary comes one day after reports that First Republic was considering a sale as well as options to enhance its liquidity.  

Others taking part in the discussion include Goldman Sachs, Morgan Stanley, U.S. Bancorp and PNC Financial Services, the WSJ report said. A deal could be announced as early as Thursday (March 16), the sources said, though the situation is fluid and its outcome far from certain.

Reports that the San Francisco-based bank was exploring a sale followed its downgrading this week by Fitch Ratings and S&P Global Ratings amid the banking industry’s ongoing turmoil.

“The bank’s business position will suffer after the volatile swings in its stock price and heightened media attention surrounding deposit volatility,” wrote S&P analysts Nicholas Wetzel and Rian Pressman. “Its business stability has weakened as market perceptions of its creditworthiness have declined.”

That volatility kicked off last week when regulators took over California’s Silicon Valley Bank (SVB) following a run on deposits. Two days after SVB folded, another lender, Signature Bank, closed its doors as well.

First Republic announced this weekend that it had gotten access to additional liquidity from JPMorgan and the Federal Reserve Bank and that its capital and liquidity were still “very strong,” PYMNTS reported.

Along with its existing access to funding from the Federal Home Loan Bank, this brought its total unused liquidity to $70 billion, First Republic said in a news release.

“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” Chairman Jim Herbert and First Republic Bank CEO and President Mike Roffler said in the release. 

“As we have done since 1985, we operate with an emphasis on safety and stability at all times, while maintaining a well-diversified deposit base.”