People are seen inside the First Republic Bank branch in Midtown Manhattan in New York, New York, U.S., March 13, 2023. REUTERS/Mike Segar
Mike Segar | Reuters
Shares of First Republic were under heavy pressure on Friday as the battered regional bank received help from other financial institutions the day before.
At market close, the stock was down 32.8%, the worst performance in the SPDR S&P Regional Banking ETFs (KRE) – which fell 6.0%. PacWest lost 19% and Abandoned Western Alliance 15%, while American bank decreased by more than 9%.
These losses came even after 11 other banks pledged to deposit $30 billion in the First Republic as a vote of confidence in the company.
“This action by America’s largest banks reflects their confidence in the First Republic and in banks of all sizes, and demonstrates their overall commitment to helping banks serve their customers and their communities,” said the group, which included Goldman. Sachs, Morgan Stanley and Citigroup. in a report.
First Republic Bank continued to crater on Friday.
It was feared that Thursday’s infusion of deposit would still not be enough to shore up the First Republic going forward.
Atlantic Equities downgraded First Republic to neutral, noting that the bank may need an additional $5 billion in capital.
“Management is exploring various strategic options which may include a full sale or divestments of portions of the loan portfolio. The limited information provided implies that the balance sheet has grown significantly which may well necessitate a capital increase,” the statement wrote. analyst John Heagerty.
In the meantime, Wedbush analysts put $5 price target on First Republicclaiming that a takeover could wipe out most of his net worth.
“A distressed M&A sale could result in minimal, if any, residual value to common stockholders due to FRC’s material negative tangible book value after accounting for fair value marks on its loans and his titles.
Late Friday, after the close of trading, the New York Times reported that the First Republic was in talks to raise capital by selling shares to other banks or private equity firms in a private sale. The terms of the deal, as to the price of the shares, how many and to whom, were still under discussion, and it was also possible that the entire bank could be sold, the Times said.
– CNBC’s Michael Bloom and Scott Schnipper contributed to this report.