The day started badly for this bank, after an article by the Bloomberg agency that stated that First Republic was exploring “strategic options” for its future, including a possible sale. Eleven US banks have agreed to place $30 billion in deposits with First Republic.
The Bloomberg agency published an article in which it stated that First Republic was exploring “strategic options” for its future, including a possible sale. Given this situation, the stock on Wall Street plummeted 36%. Finally, eleven banks in the United States agreed to place US$30,000 million in deposits in First Republic, which caused the paper to bounce up to 10%.
Bank of America, Citigroup and JPMorgan, were some of the banking entities that came to the rescue to create “confidence in the banking system” of the country, according to a joint statement. “This action by the largest banks in the United States reflects their confidence in First Republic and in banks of all sizes,” the group said, after the bankruptcy of three entities in the sector in less than a week.
First Republic was at the center of the storm this Thursday on Wall Street. The papers of this bank came to lose up to 36% after an article by the Bloomberg agency that stated that First Republic was exploring “strategic options” for its future, including a possible sale. On Wednesday its shares had lost 21% and have fallen 73% since March 8.
But the situation turned around after information from The Wall Street Journal which noted that JPMorgan Chase, Morgan Stanley and other big banks were trying to bail him out. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, the four largest banks in the country will each contribute US$5 billion. First Republic, founded in 1985 in San Francisco, is the 14th largest US bank in asset volume with $212 billion at the end of 2022.
According to the agency S&P Global Ratings, 68% of deposits at First Republic are in accounts that exceed $250,000, the limit usually guaranteed by the federal agency FDCI. Hence the fears of the market. Investors and analysts feared that many clients would prefer to move their money to banks that a priori have no risk of bankruptcy because they are too large for regulators to allow their closure.
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Source: Ambito
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