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Distressed First Republic’s shares continue to tumble

Even as shares of many of its competitors stabilised, First Republic’s stock price suffered a catastrophic decline.

• March 21, 2023
FIRST REPUBLIC BANK
FIRST REPUBLIC BANK

With its shares down nearly 90 per cent since March 8, the day Silicon Valley Bank’s problems sparked a financial panic, the First Republic, the most vulnerable bank on Wall Street, slid even closer to a collapse on Monday as they dropped 47 per cent.

Even as shares of many of its competitors stabilised, First Republic’s stock price suffered a catastrophic decline, underscoring the anxieties that could eventually affect its operations.

The San Francisco-based bank had an impressive client base of wealthy people and $176 billion in deposits up until recently.

Some of the biggest names on Wall Street put together a $30 billion cash rescue for the First Republic last Thursday.

However, it appears that the strategy hasn’t been successful thus far, as investors haven’t remained loyal to the bank.

According to the New York Times, two people with knowledge of the situation explained that the bank had recently tried to sell a stake but that this quickly changed into efforts to save the bank.

One of the people said that as of Monday afternoon, First Republic was entertaining some potential buyers, but discussions, if any, are still in the early stages.

Despite things changing, the two people said that the nation’s largest banks are unlikely to come to the nation’s rescue once more.

The stocks of numerous other midsize lenders were severely damaged by the failure of SVB and the failure of Signature Bank two days later. But by Monday, those shares were doing better.

The stock of the Californian bank PacWest increased. Western Alliance, a Phoenix-based company, saw a seven per cent decline in its shares, while Comerica and Zions Bank saw more or less flat trading.

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