First Republic shares fell again, while other regional banks rose

Shares of First Republic Bank fell again Wednesday as investors remained skeptical that the San Francisco-based bank could complete a turnaround.

Shares of First Republic (ticker: FRC ) fell as much as 17% in early trading Wednesday as reports emerged about the bank’s efforts to avoid a collapse. Shares plunged a record 49% on Tuesday after the bank said on Monday that its deposits fell more than 40% in the first quarter and revealed plans to cut up to 25% of its workforce.

First Republic is asking banks involved in its $30 billion rescue package, including JPMorgan Chase (JPM) last month, to buy bonds from the bank at above-market prices, CNBC reported, citing banks familiar with the plan. Losses from buying such bonds would be a few billion dollars, and these banks would face losses of about $30 billion if they failed, the report said.

First Republic and JP Morgan did not immediately respond to a request for comment.

First Republic is looking to sell $50 billion to $100 billion in assets to shrink its balance sheet, Bloomberg reported Tuesday.

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Monday’s report on first quarter deposit withdrawals from First Republic After the failure of Silicon Valley Bank and Signature Bank ( SBNY ), market jitters hit regional banks in March. While calm returned last month after the Federal Reserve created a new tool to provide more liquidity to banks – and big lenders led by JPMorgan Chase added deposits to the First Republic – the latest revelations have again shaken confidence in the sector.

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Other regional banks are now benefiting from the withdrawal at First Republic. PacWest Bancorp stock ( PACW ) rose 13% on Wednesday after the bank said its deposit balances have increased by $1.8 billion over the past few weeks. Western Alliance ( WAL ) rose 1% in early trade; It said last week that inflows have increased.

Other regional lenders, dragged down by First Republic’s stake due to contagion concerns, haven’t moved as much. Zions Bancorp ( ZION ) rose 0.4% and KeyCorp ( KEY ) rose 1.4% on Wednesday.

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Write to Brian Swint at [email protected]

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