Investors continued to dump First Republic shares amid fears that the US bank will be the next in a series of US bank failures.
The sell-off sent shares down more than 20 percent in morning trading on Wednesday.
This came after the price plunged to a record low the day before, falling nearly 50 percent, after the institution said it lost $100 billion in deposits in March.
The First Republic has been under pressure since a series of bank failures in the US last month raised fears of a broader crisis.
Founded in San Francisco in 1985, the bank is known for having a large mortgage lending business and a large group of wealthy clients, many of whom had more money saved with the bank than the government would guarantee.
It was seen as vulnerable to depositors withdrawing their money lest it collapse, and was squeezed by rising interest rates, having to pay more to keep deposits, while earning less on home loans made when interest rates were lower.
And last month, it received $30 billion in inflows from some of the largest US banks, a bailout aimed at boosting confidence in the bank, which seemed to allay fears.
But the amount of withdrawals revealed this week was worse than what investors expected.
The bank’s shares, which were worth more than $120 at the start of the year, ended trading Tuesday at about $8.
On Wednesday, the stock swung sharply and trading was halted repeatedly amid the volatility.
The bank – which was ranked 14th in America at the end of 2022 – said it was looking at its options.
US media said the bank is trying to persuade banks that previously supported it to buy more of its assets to help support business. They also say regulators are on the alert but not yet ready to step in.
“It is not possible to be certain whether the bank will be able to take action to enhance our business in a time frame acceptable to the market or our regulators,” the bank said on Monday.
“There can be no certainty about the bank’s future if we are not able to do so,” he added.
The problems in the US banking sector came to light earlier last month when Silicon Valley Bank, the country’s 16th bank, collapsed in the biggest failure of a US bank since 2008.
This was followed two days later by the collapse of Signature Bank in New York.
The authorities have stepped in to guarantee deposits that exceed normal limits in an effort to avoid further withdrawals of bank deposits.
But the move, which the Federal Deposit Insurance Corporation estimated would cost about $20 billion, did not prevent fears from spreading.
In Europe, Swiss officials also brokered a bailout of ailing banking giant Credit Suisse, which saw CHF61.2 billion ($69 billion; £55.2 billion) withdrawn in the first three months of the year.
Central banks around the world, including the US Federal Reserve and the Bank of England, have sharply raised interest rates in their attempt to curb inflation.
These moves have hurt the values of the large portfolios of bonds that banks bought when interest rates were low.
2023-04-26 18:33:00
#Doubts #surround #future #American #Republic #Bank #investors #flee #BBC #News #Arabic
