Los Angeles, CA – March 13: People pass First Republic Bank downtown on Monday March 13, 2023 in Los Angeles, CA.
Dania Maxwell | Los Angeles Times | Getty Images
First Republic‘s fell again on Wednesday as investors kept tabs on a possible bailout deal for the struggling regional bank.
Its shares were down about 23% on Wednesday, extending losses nearly 50% on Tuesday. The stock has fallen more than 90% since the start of the year and hit an all-time low on Wednesday, being halted several times for volatility.
First Republic’s stock was under pressure again on Wednesday.
This week’s drop for First Republic comes after the San Francisco-based lender announced late Monday that it lost about 40% of its deposits in the first quarter. First Republic was seen by customers and investors as a risky bank after last month’s collapse Bank of Silicon Valleywho had a similar financial profile.
First Republic also said in its quarterly report on Monday that it was examining strategic options to help reshape its balance sheet.
The sharp drop in deposits came despite a group of 11 major banks pumping $30 billion in deposits into the First Republic in a bid to build confidence and prevent the spread of bank runs. First Republic advisers are trying to convince at least a few of those banks to provide additional support by buying some of First Republic’s assets at above-market rates, CNBC has learned.
These purchases would result in losses for other banks, but First Republic advisers are trying to sell banks on the idea that letting First Republic fail would be even more costly if it resulted in even higher regulatory costs and fees.
If First Republic succeeds in selling some of its assets, it will then seek to raise equity, sources say, which would dilute current shareholders.
Sources told CNBC’s David Faber on Wednesday that government officials are currently unwilling to intervene in the process of saving the First Republic.
– CNBC’s Hugh Son contributed reporting.