By Senad Karaahmetovic
The largest U.S. banks are pushed to boost their reserves after they participated in efforts to bolster embattled lender First Republic Bank (NYSE:FRC) in March, Bloomberg News reports.
Some banks will set aside around $100 million, an amount which is likely to have a minimal impact on their earnings. JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and Bank of America (NYSE:BAC) all deposited $5B in FRC last month.
Overall, 11 banks participated in the combined effort that saw $30B deposited in the First Republic to help its deal with near-term outflows. Deposits have been parked with FRC for at least 4 months with all depositors fully expecting to recover their deposits.
“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” the Treasury Department, Federal Reserve, Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency said in a joint statement.
First Republic shares collapsed ~90% in March with analysts seeing the government receivership as the most likely outcome for FRC’s troubles.
The Q1 earnings season will start later this week with big banks set to report among the first S&P 500 companies.