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First Republic Bank shares slump as analysts flag impact of SVB collapse

Published 03/13/2023, 08:11 AM
Updated 03/13/2023, 08:23 AM

By Scott Kanowsky 

Investing.com -- Shares in First Republic Bank (NYSE:FRC) shed nearly two-thirds of their value in premarket trading on Monday, as wider fears over the health of U.S. financial system following the collapse of Silicon Valley Bank (NASDAQ:SIVB) outweighed news that the regional lender had secured fresh financing.

The San Francisco-based bank issued a statement on Sunday seeking to soothe skittish investors about its liquidity status, saying that it will receive financing from JPMorgan Chase & Co (NYSE:JPM) that will give it access to total available, unused liquidity worth more than $70 billion.

This excluded additional funds First Republic is able to receive under a new aid program unveiled by U.S. regulators over the weekend, the bank added. The U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation put together a bailout package that essentially protected all of SVB's depositors, including those with assets above the federally-guaranteed $250,000 limit.

But the cash infusion was not enough to keep some analysts from lowering their rating of the stock. Raymond James downgraded First Republic to "market perform" from "strong buy," arguing that the group faces the risk of a run on its deposits as the fallout from SVB's collapse deepens.

Meanwhile, analysts at Wolfe Research slashed their recommendation to "peer-perform" from "outperform."

Other regional U.S. lenders also dropped, with PacWest Bancorp (NASDAQ:PACW) shedding over a third of its value and Western Alliance Bancorporation (NYSE:WAL) down over 60%.

 
 

Latest comments

A new program? Say what?? QE?
no. fdic is making depositors whole while selling bank assets for reimbursement. the max taxpayer will have to foot is $25 billion
The Biden Bank runs continue
Bungling bank managers should have sold their 1% bonds months ago.
1% bonds never should have existed
Do you mean in the interest of the country you despise?
Wait, we were told that China was lehman time bomb...
FED will help banks? LoL
I believe that the FED should maintain a 0.25 Bps hike during the next two meetings to finalize the inflation fighting plan but immediately suspend the quantitative tightening of $120 billion per month, in order to provide all the necessary liquidity to the financial system.
Why should we suffer higher inflation because of bungling bank managers. They should have sold their 1% bonds months ago.
Powell should resign. His Fed has lost all credibility.
maybe you can speak to the manager
This bank is certainly NOT going to be the last one to go under. I doubt if JP will be able to save us from a carnage.Bank shareholders will likely carry the can in this debacle. Sad.
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