First Republic Bank In Limbo As Shares Fall Further

Shares of First Republic fell further into an abyss on Friday amid mounting speculation over the US regional bank's way forward after it reported a big fall in deposits.

After dropping more than 50 percent earlier on Friday, shares of First Republic finished the day at US$3.51, down 43 percent following numerous trading halts due to volatility.

Now worth only about US$654 million, the bank has had a stunning loss of value since its peak days in November 2021 when it had market capitalisation of more than US$40 billion.

The latest free fall follows First Republic's disclosure on Monday that it lost more than US$100 billion in deposits in the first quarter.

The bank also said on Monday that its deposit situation had stabilised following a US$30 billion infusion of funds announced in mid-March from a consortium of 11 US private banks and that it was "pursuing strategic options."

Since then, various news reports have focused on potential rescue packages involving other banks. But so far nothing concrete has materialised.

First Republic quickly moved into focus on Wall Street's list of worries after the early March failures of Silicon Valley Bank and Signature Bank sparked fear of contagion.

A Federal Reserve review of the SVB collapse on Friday called for tighter supervision of banks.

While the recent batch of earnings reports from mid-sized US banks pointed to a weakening profit outlook in anticipation of tougher rules, market watchers viewed the reports as broadly reassuring.

CFRA Research analyst Alexander Yokum considers the most likely scenarios involve a sale of First Republic following a receivership by the Federal Deposit Insurance Corporation (FDIC), or the sale of its assets to other financial players.

But a problem for either scenario would be the negative value of First Republic's loans, which would result in a loss in value for a prospective buyer. (AFP)