First Republic stock is set to rise for day two as the regional bank seeks a bailout deal


People walk past a First Republic Bank branch on March 20, 2023 in New York City.

Gary Hershorn | Corbis News | Getty Images

Shares of First Republic were up on Friday as the regional bank seeks a potential bailout deal to reshape its business after suffering massive deposit outflows in the first quarter.

The stock rose more than 4% in premarket trading, or about 28 cents, after rising more than 8% on Thursday. The stock has fallen more than 90% this year as investors lost confidence in the bank after two regional lenders went bankrupt in March.

Reuters reported on Friday that US officials — including from the Federal Deposit Insurance Corporation, the Treasury Department and the Federal Reserve — were coordinating meetings with other banks to negotiate a bailout for the First Republic.

CNBC reported Wednesday that advisers at First Republic are preparing to present major banks with a plan that would allow the regional lender to sell bonds and other assets at above-market rates and then raise equity. The sales would result in a loss for the banks buying the bonds, but could be cheaper in the long run than letting the bank fail and be seized by regulators.

Shares of First Republic closed at $16 on Monday before the bank released its first-quarter results, which showed deposits down about 40%. The stock fell more than 60% over the next two days, hitting a new all-time low.

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First Republic’s stock is rebounding slightly after falling more than 60% in two days.

First Republic is a regional bank that has focused on high net worth individuals and their businesses, offering mortgages at low interest rates.

Those mortgages, along with other long-term assets on the bank’s balance sheet, have lost market value since the Fed began raising rates last year, raising fears among investors that the bank may have to save a significant loss if it were forced to sell these assets. to raise funds.

The massive deposit outflows from the bank came after the collapse of Silicon Valley Bank and Signature Bank in March. The country’s biggest banks, including JPMorgan Chase, have already helped First Republic since then with $30 billion in term deposits.

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