First Republic bank plunges 35% after downgrading of S&P risk rating

the american bank First Republichit by a new rating downgrade by the S&P agency, which considers “maybe” insufficient aid of US$30,000 million delivered by a group of large banks, sinks back into Wall Street this Monday.

Despite the upward trend in other bank stocks, First Republic shares, which have already lost 80% of their value in eight sessions, it drops another 35% in a difficult day for the bank.

The rest of the sector seems calmer after the emergency measures taken in the United States to restore confidence in the banking system and the purchase of Credit Suisse by UBS announced on Sunday.

UBS agreed on Sunday to pay 3 billion Swiss francs ($3.2 billion) to buy Credit Suisse, at 0.76 francs per share, after intensive negotiations with the finance ministry, the central bank and the Swiss market supervisory authority ( finma).

Big US banks like JPMorgan, Bank of America and Citigroup were respectively earning 2.2%, 1.7% and 2.5% on Wall Street. Medium-sized banks, badly hit last week, were also recovering ground, such as PacWest (+21.7%), Zion (+8.3%) or Western Alliance Bancorporation (+7.3%).

S&P Global Ratings, which had placed First Republic in the speculative investment category last Wednesday, lowered the organization’s rating three more notches on Sunday.

The deposits for 30,000 million dollars in First Republic placed by eleven large banks “should alleviate the need for liquidity in the short term,” S&P highlights in a note.

“But that may not solve the strategic, liquidity, financing and profitability problems facing the bank,” the agency added.

S&P warned that it could further downgrade First Republic, which trades under the symbol FRC, “if the bank fails to demonstrate progress in stabilizing deposits and recovering the firm’s value, which has likely eroded.”