Why did First Republic need a $30BN intervention? Bank was hit with contagion ... trends now
The bosses of America's largest banks united on Thursday to help flailing First Republic Bank, in a move of enlightened self-interest designed to calm the entire sector.
First Republic received $30 billion in deposits from 11 banks after it was seen to be teetering, and at risk of bringing others down with it.
'This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,' said a group of U.S. regulators led by Treasury Secretary Janet Yellen.
The bank was seen as vulnerable following the collapse of Silicon Valley Bank last week, with both SVB and First Republic having similar compositions in key areas.
When Silicon Valley Bank went into freefall on March 9, analysts thought First Republic would not be far behind.
Struggling First Republic Bank has received $30 billion in deposits from a consortium of major US banks as part of a rescue package for the regional lender
A gallery of photos on the bank's homepage shows clients at swanky gatherings and events with champagne, spreads of food and live music
Clients receive free swag from First Republic Bank at an Oktoberfest event
Both banks courted a high-net-worth clientele.
SVB, founded in 1983 in Santa Clara, California, catered in particular for tech investors and wineries in the Bay Area, but also had a strong East Coast presence.
First Republic, launched in 1985 in San Francisco, enticed wealthy people on both coasts.
First Republic's clients included Mark Zuckerberg, who was offered a 1.05 percent mortgage rate on a $5.95 million loan for his five-bedroom Palo Alto home in 2011.
At the time, the average 30-year rate was 4.45 percent.
About three-quarters of the bank's mortgage approvals are 'jumbo' loans, or loans above $417,000, the WSJ reported.
And the average mortgage at First Republic is more than $1.2 million.
Many clients are on a first-name basis with their branch manager and cite personal attention as their reason for banking with the lender.
SVB's clients included billionaire venture capitalist Peter Thiel.
Mark Zuckerberg was among First Republic's clients and received a mortgage on extremely favorable terms
First Republic bankers flocked to San Francisco for a no-expense-spared Wonka-themed Christmas party
First Republic Bank is known for being the bank for the super rich, with oyster-fueled events for clients and glitzy Christmas parties for staff. Pictured: Facebook post by Robert Callan Jr. of Sothebys from inside a Willy Wonka inspired First Republic Bank Holiday Event
At First Republic, customers with median net worth of $3.3 million were enticed by lavish perks including cocktail parties at its 69 branches,
