First Republic notches modest gain after steep sell-off
4:59 pm Thursday, April 27th, 2023
By Niket Nishant and Chibuike Oguh
(Reuters) – First Republic Bank’s shares rebounded on Thursday from a steep sell-off that wiped out nearly 60% of the regional bank’s market value this week.
San Francisco-based First Republic disclosed on Monday it had lost more than $100 billion of deposits in the first quarter, triggering a sharp sell-off to new depths on Wednesday.
The stock rose 8.8% on Thursday to $6.19 as the broader S&P 500 rallied about 2%. The S&P 500 Banks index and KBW Regional Banking index, gained 1.4% and 2.1%, respectively. First Republic’s shares closed at $14.26 last Friday.
First Republic’s sell-off renewed pressure on U.S. banks in their biggest turmoil since 2008. Two other mid-sized U.S. lenders, Silicon Valley Bank and Signature Bank, were the first casualties of the latest crisis fueled by depositors fleeing regional banks seeking capital to cover mounting losses from their bond assets after the Federal Reserve’s aggressive interest rate hikes.
Credit Suisse, the 167-year-old Swiss bank, collapsed last month after investors lost confidence in its shares and bonds, forcing regulators to engineer a merger with rival UBS Group.
“First Republic lost and is continuing to lose deposits. No bank on earth can survive if its customers pull their money out of the bank – especially if it happens all at once,” said Adam Sarhan, CEO of 50 Park Investments.
U.S. bank regulators are weighing the prospect of downgrading their private assessments of First Republic, Bloomberg News reported on Wednesday.
Such a downgrade could curb First Republic’s ability to borrow from the Fed, the report said.
(Reporting by Niket Nishant in Bengaluru and Chibuike Oguh in New York; Editing by Saumyadeb Chakrabarty, Lance Tupper, David Gregorio and Richard Chang)
