First Republic Bank’s shares plummeted more than 49% on the stock market yesterday, and have now collapsed by more than 93% in less than two months. Will the Californian bank be the next to go bust?
Firt Republic Bank loses 93% on the stock market in less than 2 months
After the banking crisis that came straight from the United States in March, a new player seems to see its future compromised: First Republic Bank. The difficulties are mounting for the Californian bank, and Tuesday’s trading session saw its share price plummet by 49.38%.
Worse still, the share price has fallen by more than 93% since the beginning of March, wiping out more than $42 billion in capitalisation and valuing the stock at less than $2.93 billion:
First Republic Bank share price
As a result, the bank is accumulating financial difficulties, despite a rescue plan last March that saw 11 banks inject 30 billion in liquidity in order to avoid a scenario similar to that of Silicon Valley Bank (SVB).
The bank faces massive withdrawals
According to the Financial Times, First Republic Bank customers have withdrawn some $100 billion in deposits since last month.
People from the White House, the Federal Reserve (FED) and the Treasury Department are said to have approached the bank recently to try and find a solution. It is also possible that the Federal Deposit Insurance Corporation (FDIC) will take control of the situation to protect customer assets, as it did with SVB and Signature Bank last month.
According to Bloomberg, the bank is considering divesting between $50 billion and $100 billion of assets in an attempt to get out of the crisis. In addition, customer deposits, which had been estimated at 137 billion dollars, were announced on Monday at 104.5 billion dollars, well below forecasts.
The future of First Republic Bank is therefore uncertain, and the next few days will be decisive in deciding whether the bank will be rescued or go bankrupt.
It should be noted that this bank run could pose a systemic risk due to the multitude of commercial links between the banks. Last month, a study revealed that no fewer than 186 banks had a similar model to SVB.
On the back of all this, the price of Bitcoin has risen slightly by 3.5% in the last 24 hours, after a few days of correction. The asset is now trading at around $28,400.
