Another bank in the USA was threatened with bankruptcy. First Republic shares fell 49.4% on the day
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Shares of the American bank First Republic fell by almost 50% on Tuesday after it became known about the mass withdrawal of deposits by the bank’s clients. Now US regulators are trying to stabilize it. This is reported by the Financial Times.
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Falling shares
The value of First Republic’s shares fell by 49.4% the next day after it became known that its clients withdrew deposits in the amount of $100 billion against the background of the bankruptcy of three American banks at once in March. Since the beginning of the year, the bank’s shares have fallen by more than 93%.
At first, First Republic stated that it was considering “strategic options” for exiting the current situation. At the same time, according to the sources of the Financial Times, the bank is unable to find a working solution, for example, selling all or part of the bank.
According to the interlocutor of the publication, the bank has been looking for buyers for a part of its business for several weeks, but in vain – due to too high risks.
The bank is now in contact with the US government, which is on high alert following the earlier bankruptcies of Silicon Valley, Signature Bank and Silvergate.
According to the interlocutors, the main options for saving the bank are the help of some large American banks, which recently invested $30 billion in First Republic, or the Federal Insurance Corporation will take control of the institution and offer a state guarantee for all deposits, as was the case with Silicon Valley .
Representatives of the White House, the Federal Reserve System and the U.S. Treasury recently contacted First Republic because the Biden administration is concerned that the bank is running out of time to reassure depositors and investors.
Despite the sharp drop in shares of First Republic, the index of regional banks KBW decreased by less than 4%. That is, investors are now more calm than when Silicon Valley collapsed, which led to a fall in shares in the entire sector.
Source: Ministry of Finance
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