First Republic is among a cadre of regional financial institutions that have been swept up in broader stock market jitters following the collapse of Silicon Valley Bank and Signature Bank in early March.
Uncertainty swirls around it even as bank leaders insist that liquidity remains “very strong.” The ratings agencies S&P and Moody’s both downgraded the First Republic’s credit, citing liquidity problems and a heavy reliance on short-term debt. Last week. 11 of the nation’s largest banks announced they would deposit a total of $30 billion into First Republic.
Now, according to a Bloomberg report, Wall Street leaders and U.S. officials discussing an intervention are exploring the possibility of government backing to seal a deal. The report, citing people with knowledge of the situation, included several possible roles for the government, including lifting some of the assets that have eroded First Republic’s balance sheet or offering liability protection.
Various media reports have hinted that more aggressive action is being considered to prevent another bank failure. The Wall Street Journal reported Wednesday that the bank tapped Lazard Ltd. and McKinsey & Co. to help review possible options, which could include a sale, additional a capital infusion or some form of asset trimming.
This is a developing story and will be updated.
