Benzinga - The $30 billion deal to shore up First Republic Bank (NYSE: FRC) was reportedly discussed by Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and JPMorgan Chase & Co (NYSE: JPM) CEO Jamie Dimon this week.
What Happened: Citigroup Inc’s (NYSE: C) Jane Fraser also contacted large banks to rope them into the rescue of First Republic, reported Reuters, citing people familiar with the matter.
Rodgin Cohen, a lawyer at Sullivan & Cromwell, reportedly played a central role in the deal.
The Treasury Department, Federal Reserve, and JPMorgan did not immediately respond to Benzinga’s request for comment on the development.
Why It Matters: The involvement of high-profile figures in the negotiations shows the gravity of the situation facing the regional U.S. bank sector which has been hit by the collapse of SVB Financial and Signature Bank, noted Reuters.
First Republic is set to receive uninsured deposits totaling $30 billion from a number of banks including JPMorgan, Bank of America, Citigroup, Morgan Stanley, and Goldman Sachs.
As of March 15, First Republic had a cash position of nearly $34 billion, which doesn’t include assistance from other banks.
Deposit outflows have slowed down recently and the bank is reevaluating its balance sheet, according to a prior report.
Price Action: On Thursday, First Republic Bank shares dropped 17.3% in after-hours trading to $28.44 after closing 10.3% higher at $34.38 in the regular session, according to data from Benzinga Pro.
Read Next: First Republic Rallies As Major US Banks Pledge Assistance To Calm Markets
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.