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  1. Active ETF Channel
  2. First Republic Gets $30 Billion Lifeline
Active ETF Channel
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First Republic Gets $30 Billion Lifeline

James ComtoisMar 17, 2023
2023-03-17

Eleven banks are depositing a total of $30 billion to First Republic Bank in an attempt to not just lift the struggling bank out of a tailspin but also to boost confidence in the U.S. banking system.

Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo announced they are each depositing $5 billion into the struggling bank. Meanwhile, Goldman Sachs and Morgan Stanley are each depositing $2.5 billion, and BNY-Mellon, PNC Bank, State Street, Truist, and U.S. Bank are each depositing $1 billion. All of these new deposits from the banks are uninsured.

“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” said a joint statement issued by the banks.

Following the collapse and receiverships of Silicon Valley Bank and Signature Bank, many small regional banks saw outflows. It also looked as though First Republic may be the next to get hit as its stock price was pummeled. First Republic’s stock, which was trading at $115 per share on March 8, at one point fell to below $20 during trading on Thursday. The stock was repeatedly halted during the session. It was trading at around $28.53 per share during Friday morning trading.

The failure of these banks also led to many small regional banks seeing outflows, as investors got spooked by the prospect of contagion within the banking system. This private bailout is an attempt to add liquidity and curb redemptions.

“Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most,” the statement added. “America’s larger banks stand united with all banks to support our economy and all of those around us.”

In a statement issued by First Republic Bank, executive chairman Jim Herbert and CEO Mike Roffler shared their “deep appreciation” for the banks’ “collective support.”

Uncertainty Remains

While some Wall Street analysts say that this $30 billion lifeline to First Republic should curb future bank withdrawals and increase confidence in the sector, investors remained uneasy on Friday, with the three major markets dropping during morning trading and First Republic’s stock falling 20% despite gaining nearly 10% in the previous session.

During uncertain times like this, it may be a good idea for investors to take advantage of active management. While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.

As part of its lineup of active ETFs, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP C+), the T. Rowe Price Dividend Growth ETF (TDVG B), the T. Rowe Price Equity Income ETF (TEQI B), the T. Rowe Price Growth Stock ETF (TGRW C), and the T. Rowe Price US Equity Research ETF (TSPA C).

T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.

For more news, information, and analysis, visit our Active ETF Channel.


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