“First Republic” shares lose 25%, and the stocks of US banks fall, despite the package of deposits
Despite the agreement on Thursday evening on a package of deposits from 11 of the largest US banks, at a value of $ 30 billion, the American First Republic Bank share continued its decline during Friday’s trading, losing nearly a quarter of its value, reaching a price of $ 25.60 per share, and withdrawing institutional shares. Finance with him to the red.
By the end of the week’s trading, the S&P Regional Banks Index (KRE) lost 5% of its value, after the shares of some banks lost more than 10%.
The group of banks that provided the package of deposits to the distressed bank, which includes JP Morgan, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup, said: “This measure by the largest American banks reflects their confidence in the First Republic and in banks of all sizes. Their general commitment to helping banks, to serve their customers and communities, is evident during the current period.
First Republic shares fell, after investors considered that the amount that was raised from the major banks may not be enough to save the bank.
US stock brokerage Atlantic Equities downgraded First Republic Bank to neutral, noting that the bank may need an additional $5 billion in capital.
“The bank’s management is exploring various strategic options that may include a complete sale or divestiture of parts of the loan portfolio. The limited information provided indicates that the balance sheet has increased significantly, which may necessitate a capital increase,” the company wrote in a note to clients.
Meanwhile, analysts at investment management firm Wedbush put a stock price target of $5, noting that a takeover could wipe out most of its share value.
And they added that “the failure of mergers and acquisitions can lead to a minimum residual value, if any, for the owners of common shares, due to the large negative book value in the bank’s balance sheets, after taking into account the fair value marks on its loans and securities.”
