As regional banks in the United States like San Francisco’s First Republic face uncertain futures amid the turbulence following the collapse of Silicon Valley Bank, their art world partners risk the loss of funding and sponsorships.
When Silicon Valley Bank (SVB) collapsed earlier this month after a bank run, investors feared San Francisco-based bank First Republic may be vulnerable to similar risks and began pulling funds from their accounts. Between SVB’s collapse on 10 March and 19 March, First Republic customers withdrew a collective $70bn—nearly 40% of the bank’s deposits—according to The Wall Street Journal. Some 68% of all the bank’s deposits were not insured by the Federal Deposit Insurance Corporation (FDIC) because they were above the $250,000 limit, a high rate for a regional bank.
If First Republic shutters, cultural institutions it sponsors could lose out on crucial corporate support. The bank is listed as a corporate sponsor, partner or member at art museums nationwide, including the Whitney Museum of American Art, the Frick Collection and Poster House in New York; the Isabella Gardner Stewart Museum in Boston and the Asian Art Museum in San Francisco. While First Republic is listed as a corporate partner at SFMOMA, the museum clarified that First Republic is not currently a sponsor and declined to comment further.
First Republic also appears to provide banking services to several art world organisations: client testimonials listed on the bank’s website include the Isabella Stewart Gardner Museum, the Institute of Contemporary Art, Boston and Fraenkel Gallery in San Francisco. A spokesperson for the Oakland Museum of California—which, according to the First Republic website, has been a client of the bank since 2012—told The Art Newspaper that the institution’s “banking relationship is in active discussion with our board and we haven't made any definitive decisions”.
First Republic Bank did not respond to requests for comment.
“Our commitment to client service is unchanged, and we remain well-positioned to continue to manage deposit activity,” the bank’s founder and executive chairman James H. Herbert II and chief executive, president and board member Michael J. Roffler said in a joint statement this week.
Another First Republic board member, Pamela J. Joyner, is a major collector of African American art and also serves on the boards of the Art Institute of Chicago, SFMOMA and the J.Paul Getty Trust. Joyner did not respond to a request for comment.
On 17 March, First Republic received a lifeline in the form of an announcement that a consortium of 11 of the largest banks in the US would give First Republic $30bn to help the regional bank meet the demand of customer withdrawals and help restore confidence in the country’s banks amid turmoil. Banks taking part in the rescue include Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, which said they will provide $5bn each.
First Republic’s shares have collapsed since early March and dropped as low as $11.92 per share as of Friday (24 March) afternoon. In early February, shares were trading for around $147. Even news of the $30bn lifeline did not help share prices for long, and on 20 March First Republic's stock plummeted after the The Wall Street Journal reported JPMorgan Chase executive Jamie Dimon is leading talks for the banks to convert some or all of the money into an equity investment or even a sale. First Republic shareholders would lose money if the bank were to be sold at a discount.
Earlier this month, both SVB and Signature Bank collapsed and were taken over by the FDIC. Signature Bank was previously listed as either a sponsor or corporate partner for cultural institutions like the Metropolitan Museum of Art in New York in 2021.
After UBS announced a takeover of Credit Suisse on 19 March, all of the European art institutions supported by the embattled Swiss bank except one told The Art Newspaper they would be happy for UBS to become their new sponsor. The National Gallery in London—Credit Suisse’s only partner museum outside of Switzerland—had no comment.