The move by major banks on Thursday to extend a much needed lifeline to First Republic should help reignite confidence in the sector after a difficult week, Wall Street says. A group of 11 prominent banking players, including Bank of America , Citigroup , JPMorgan and Morgan Stanley , pledged Thursday to inject $30 billion worth of deposits into First Republic in an effort to rescue the struggling firm . "We view the move by the industry as a positive step to stem contagion amid the regional bank crisis," wrote Evercore ISI's John Pancari in a Thursday note. "We believe the move sends a message of broader stability for the sector and should help further temper depositor fears," and enables the "bank to fight another day." First Republic shares have plummeted 58% this week, after the failure of Silicon Valley Bank triggered a massive selloff among regional bank stocks and panic deposit flight from customers. That's on top of a roughly 34% dive last week. FRC YTD mountain First Republic shares so far this year Goldman Sachs' Ryan Nash called the move $30 billion rescue plan a "create industry solution" to limit the likelihood of future bank runs, slow deposit outflows, and alleviate the need for more government response. "While we are uncertain if this is a long-term solution and earnings are likely to be materially impaired in the near-term, it does provide a much needed liquidity infusion for the company to meet near term deposit outflows in an orderly fashion," he said in a Thursday note. While the move may only mark a temporary solution to First Republic problems, and fails to answer when deposits will ramp back up again, Wall Street analysts view it as sign of confidence in the broader banking industry. "In our view, this confirms that our banks are well positioned, including our regionals, and are gaining some deposits," wrote JPMorgan analyst Vivek Juneja in a Friday note. "Our sense is that even our banks that are not part of this consortium should be holding up well and potentially seeing some inflows." The move by major banks also shows that despite its short-term liquidity issues, First Republic is viewed by the industry as worthy of being saved, wrote Oppenheimer's Chris Kotowski in a Thursday note. "It is also a sly vote of confidence in the contributing banks," he said. "If the regulators were seriously concerned about the viability of FRC even with the emergency funding package, they would not want to saddle these banks with additional losses given the shattered state of market confidence." — CNBC's Michael Bloom contributed reporting
