As regional banks in the United States like San Francisco’s First Republic face an uncertain future amid the turmoil following the collapse of Silicon Valley Bank, their art world partners risk losing their funding and sponsorships.
When Silicon Valley Bank (SVB) collapsed earlier this month after a bank run, investors worried that San Francisco-based First Republic Bank was vulnerable to similar risks and began withdrawing funds in their accounts. Between SVB’s collapse on March 10 and March 19, First Republic customers withdrew a total of $70 billion, or nearly 40% of the bank’s deposits, according to The Wall Street Journal. Some 68% of all bank deposits were uninsured by the Federal Deposit Insurance Corporation (FDIC) because they exceeded the $250,000 limit, a high rate for a regional bank.
If the First Republic closes, the cultural institutions it sponsors could lose crucial corporate support. The bank is listed as a sponsor, partner, or corporate member in 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 Museum of Asian Art in San Francisco. While the First Republic is list as a corporate partner of 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 organizations: client testimonials listed on the bank’s website include the Isabella Stewart Gardner Museum, the Institute of Contemporary Art in Boston, and the Fraenkel Gallery in San Francisco. A spokesperson for the Oakland Museum of California, which, according to the First Republic website, was a customer of the bank since 2012—said The arts journal that the “banking relationship of the institution is in active discussion with our board of directors and that we have not taken any final decision”.
First Republic Bank did not respond to requests for comment.
“Our commitment to customer service is unchanged and we remain well positioned to continue to manage the deposit business,” said bank founder and executive chairman James H. Herbert II and chief executive, president and Board Member, Michael J. Roffler. joint statement this week.
Another First Republic board member, Pamela J.Joyner, is an avid collector of African-American art and also sits 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 March 17, First Republic received a lifeline in the form of an announcement that a consortium of 11 of the largest banks in the United States would give First Republic $30 billion to help the regional bank meet customer demand for withdrawals and help restore confidence in the country’s banks in turmoil. Banks participating in the bailout include Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, which said they would provide $5 billion each.
Shares of First Republic have slumped since early March and fell to $11.92 per share on Friday afternoon March 24. In early February, the shares were trading around $147. Even news of the $30 billion lifeline didn’t help stock prices for long, and on March 20, First Republic shares fell after the The Wall Street Journal reported that JPMorgan Chase executive Jamie Dimon is leading negotiations for the banks to convert some or all of the money into 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, SVB and Signature Bank collapsed and were taken over by the FDIC. Signature Bank was previously on the list of sponsors or corporate partners of cultural institutions such as the Metropolitan Museum of Art in New York in 2021.
After UBS announced a takeover of Credit Suisse on March 19, all European art institutions backed by the embattled Swiss bank, except one says The arts journal they would be happy for UBS to become their new sponsor. London’s National Gallery, Credit Suisse’s only partner museum outside of Switzerland, had no comment.
