Shares in American regional lender First Republic crashed to fresh lows last night amid reports the US government is currently unwilling to rescue the bank.
In another brutal sell-off, the stock tumbled as much as 40 per cent, leaving the bank worth less than $1billion (£800million) for the first time.
It was worth more than $40billion (£32.1billion) in November 2021.
Last night’s tumble came after a near-50 per cent fall in the previous session and took losses for the year to 95 per cent.
The latest rout came as CNBC, the cable business news channel reported that US government officials are not hatching a rescue mission for the San Francisco-based lender even after nervous customers pulled $100billion (£80.3billion) worth of deposits in the first quarter of 2023.
In another brutal sell-off, First Republic stock tumbled as much as 40%, leaving the bank worth less than $1bn (£800m) for the first time
Most of the outflows came in the three weeks after Silicon Valley Bank’s (SVB) collapse on March 10, which ignited ‘unprecedented deposit outflows’.
The crisis prompted a group of America’s largest banks, including JP Morgan and Citigroup, to pump £25billion into First Republic last month in a desperate bid to keep it afloat.
But with the share price tanking once again, First Republic and its advisers are now scrambling for ways to save the bank.
Having bounced off its early lows, the stock still closed down 32.7 per cent. Concerns of a wider banking crisis eased, however, as rival regional lenders across the US saw their shares edge higher.
PacWest Bancorp was up 7.7 per cent while Fifth Third Bancorp added 0.9 per cent. Zion Bancorp, however, fell 1.05 per cent.
‘I would suggest that the fact that PacWest Bancorp is on the up points towards that, even if First Republic goes under, any contagion is likely to be contained,’ said Michael Hewson, an analyst at CMC Markets.
Fears of a global banking crisis erupted last month as the collapse of three US lenders – SVB, Signature and Silvergate – sparked panic on financial markets around the world.
In Europe, the crisis has engulfed Credit Suisse, forcing the once-august Swiss banking giant into the hands of its arch-rival UBS in a humiliating rescue that was orchestrated by the country’s government and regulators.
Victoria Scholar, head of investment at Interactive Investors, said: ‘Concerns about the health of the banking sector have resurfaced following First Republic’s plunge after it reported $100billion of withdrawals, prompting fears of another mid-cap bank failure Stateside.’
