First Republic Bank plummets 36% again on “likely” FDIC intervention

First Republic Bank plummets 36% again on “likely” FDIC intervention

First Republic Bank’s stock has plunged plummeted more than 36%. in mid-session trading on Friday due to uncertainty about its viability following reports from CNBC sources that it is “most likely” that the entity will be intervened by the Federal Deposit Insurance Corporation (FDIC).

These same sources have assured that the FDIC has sounded out “other banks” about “potential offers” in case it has to intervene. However, these informants have also stated that “still there is hope” that a solution can be reached that does not involve intervention.

In this regard, First Republic Bank itself has confirmed to CNBC that it is “in discussions with various parties about the options” available. This Friday, the stock was trading at $3.90. (€3.54), down $2.29 (€2.08) from the previous day.

View of the central panel of the Madrid Stock Exchange trading floor in Plaza de la Lealtad on Tuesday.

Cumulative fall of 90%.

Last Wednesday, the shares of First Republic Bank. fell more than 36%. after the regional bank’s share price had already plunged 49.37% also on Tuesday amid uncertainty about the future viability of the bank, which in the first quarter of 2023 suffered a massive flight of deposits.

According to data released last Monday by the bank at the close of markets in the United States, in the first quarter of the year it recorded the outflow of almost 58% of the deposits posted in the previous quarter, a figure of about 100 billion dollars (90,691 million euros). As a result, First Republic Bank has accumulated a 90% drop in the stock market so far this year.

“Poor management.”

The collapse of Signature Bank was due to the “poor management” on the part of its managers.The Federal Deposit Insurance Corporation (FDIC) said in a report released Friday.

“The management of Signature Bank did not prioritize good governance practicesdid not always address the FDIC’s concerns, and did not always satisfy, or in a timely manner, the FDIC’s supervisory recommendations,” the agency explained.

Silicon Valley Bank

The contagion effect following the collapse of Silicon Valley Bank and the liquidation of Silvergate Bank, which occurred days before Signature was intervened, spurred a flight of depositsthe document confirmed.

In this regard, “relied excessively on uninsured deposits.”which represented between 63% and 82% of total assets during the period analyzed.

In addition, the bank itself “failed to appreciate” its high exposure to cryptocurrency deposits, which accounted for 20% of its deposits, or the vulnerability arising from instability in this sector in late 2022 and continuing into 2023.

Kayleigh Williams