First Republic Bank, facing a crisis of confidence from investors and customers, is actively discussing options for a lifeline.
Markets on edge over liquidity woes
The bank's problems reflect continued worries about the banking system in the aftermath of the collapse of Silicon Valley Bank and Signature Bank. Many regional banks, including First Republic, have large amounts of uninsured deposits above the $250,000 FDIC limit. Although not close to SVB's massive percentage of uninsured deposits , First Republic has a sizable 68% of total deposits that are uninsured, according to S&P Global.
To make money, banks use a portion of customers' deposits to give out loans to other customers. But First Republic has an unusually large 111% liability-to-deposit ratio, S&P Global says. That means the bank has lent out more money than it has in deposits from customers, making it a particularly risky bet for investors.
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