Banks rescue First Republic in $30 billion plan

A group of 11 banks came together to pump funds into First Republic Bank as a show of confidence in the United States banking system, the banks said in a statement Thursday. Each bank is depositing at least $1 billion into San Francisco-based First Republic. First Republic stock values had been down as much as 36 percent earlier Thursday, but rose after the announcement and closed out Thursday up 10 percent. Large banks similarly rescued other banks at the beginning of the 2008 financial crisis.

Why did First Republic need rescue? First Republic serves a similar clientele as Silicon Valley Bank which collapsed last week following a bank run. Many of First Republic’s clientele are millionaires and billionaires, and much of their assets would not be insured under the Federal Deposit Insurance Corp., which insures deposits up to $250,000. Fitch Ratings and S&P Global downgraded First Republic’s credit rating Wednesday because of the high number of uninsured deposits. First Republic is also among the banks Moody’s Investors Service is considering downgrading.

Dig deeper: Read Carolina Lumetta and Leo Briceno’s report in The Stew on what went wrong at Silicon Valley Bank.