First Republic plunges in SVB fallout despite fresh funding
By Josh White
Date: Monday 13 Mar 2023
(Sharecast News) - Shares in First Republic Bank were plummeting in early trading on Wall Street on Monday, despite the bank securing a fresh injection of funding over the weekend.
The private bank and wealth manager had announced on Sunday that it secured additional liquidity from the Federal Reserve and JPMorgan Chase.
It said additional borrowing capacity from the Federal Reserve, continued access to funding through the Federal Home Loan Bank, and ability to access additional financing through JPMorgan, would "increase, diversify, and further strengthen" First Republic's existing liquidity profile.
The total available, unused liquidity to fund operations now stood at over $70bn.
"First Republic's capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalised banks," said founder and executive chairman Jim Herbert and chief executive officer and president Mike Roffler in a joint statement.
"As we have done since 1985, we operate with an emphasis on safety and stability at all times, while maintaining a well-diversified deposit base.
"First Republic continues to fund loans, process transactions and fully serve the needs of clients by delivering exceptional service."
However, the cash infusion failed to lift investor sentiment, with Raymond James double-downgraded the bank's stock to "market perform" from "strong buy", according to Reuters.
The downturn in First Republic Bank's shares came in the wake of the collapse of Silicon Valley Bank on Friday.
The bank was taken into the custodianship of the Federal Deposit Insurance Corporation (FDIC) after it failed to cover a liquidity shortfall.
That was followed by the FDIC taking over Signature Bank, a smaller crypto-specialist private bank, on Sunday.
Silvergate Bank also announced its plans to wind down and liquidate its assets on 8 March, adding to investor concerns about the overall health of the banking sector.
At 0955 EDT (1355 GMT), shares in First Republic Bank were down 65.45% at $28.25.
Reporting by Josh White for Sharecast.com.
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