NEW YORK (AP) — Eleven of the biggest U.S. banks Thursday announced a $30 billion rescue package for First Republic Bank in an effort to prevent it from becoming the third to fail in less than a week and head off a broader banking crisis.
San Francisco-based First Republic serves a similar clientele as Silicon Valley Bank, which failed last week after depositors withdrew about $40 billion in a matter of hours. New York’s Signature Bank was shuttered on Sunday. It appears that First Republic, which had deposits totaling $176.4 billion as of Dec. 31, was facing similar issues.
The group of banks behind the rescue package confirmed that other unnamed banks had seen large withdrawals of uninsured deposits. The Federal Deposit Insurance Corporation insures deposits up $250,000 for individual accounts.
Republic’s shares dropped more than 60% Monday, even after the bank said it had secured additional funding from JPMorgan and the Federal Reserve.
The rescue package brought back memories of the 2008 financial crisis, when banks collectively came to the aid of weaker banks in the early days of the crisis. Banks then bought each other in hurried deals in order to keep the crisis from spreading further.