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First Republic Bank shares slump as analysts flag impact of SVB collapse

Published 13/03/2023, 13:26

By Scott Kanowsky 

Investing.com -- Shares in First Republic Bank (NYSE:FRC) shed nearly two-thirds of their value in premarket trading on Monday, as wider fears over the health of U.S. financial system following the collapse of Silicon Valley Bank (NASDAQ:SIVB) outweighed news that the regional lender had secured fresh financing.

The San Francisco-based bank issued a statement on Sunday seeking to soothe skittish investors about its liquidity status, saying that it will receive financing from JPMorgan Chase & Co (NYSE:JPM) that will give it access to total available, unused liquidity worth more than $70 billion.

This excluded additional funds First Republic is able to receive under a new aid program unveiled by U.S. regulators over the weekend, the bank added. The U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation put together a bailout package that essentially protected all of SVB's depositors, including those with assets above the federally-guaranteed $250,000 limit.

But the cash infusion was not enough to keep some analysts from lowering their rating of the stock. Raymond James downgraded First Republic to "market perform" from "strong buy," arguing that the group faces the risk of a run on its deposits as the fallout from SVB's collapse deepens.

Meanwhile, analysts at Wolfe Research slashed their recommendation to "peer-perform" from "outperform."

Other regional U.S. lenders also dropped, with PacWest Bancorp (NASDAQ:PACW) shedding over a third of its value and Western Alliance Bancorporation (NYSE:WAL) down over 60%.

 
 

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