First Republic Bank crisis deepens as shares plunge 50 per cent with sharp sell off
First Republic Bank crisis
The First Republic Bank’s shares continued to plunge on Tuesday as financial regulators scrambled to come up with a plan to stabilise the financialhealth of the bank.
The California-based lender’s stock price is now down by more than 90 per cent this year. It fell by a further 50 per cent a day after it was reported that the customers has withdrawn $100bn of deposits during last month’s turmoil led by Silicon Valley Bank’s collapse.
What the First Republic is saying?
The First Republic said on Monday that it was considering “strategic options” as it announced the firing of up to 25 per cent of its workforce. However, a report in the Financial Times citing people briefed on the matter, said that the bank is struggling to come up with a solution.
ALSO READ |First Republic Bank to cut up to 25% workforce as deposits tumble
Meanwhile, Washington remains on alert following the collapse of Silicon Valley Bank and Signature Bank last month.
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First Republic crisis: What can the US government do?
The leading options involve large US banks rescuing the First Republic by injecting more money. Or the Federal Deposit Insurance Corporation can take control of the bank while offering a government-sponsored guarantee for all deposits. The Biden administration is reportedly becoming increasingly concerned that First Republic is running out of time to assure depositors and investors that it stands on solid financial ground, theFinancial Times report added.
ALSO WATCH |First Republic Bank loses $100 billion in deposits
But there are signs that the US government is not much concerned about a supposed expansion of the First Republic crisis into a wider banking sector.
On Tuesday, the KBW regional bank index was down less than 4 per cent despite a massive dip recorded by the First Republic Bank.
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