First Republic Hits Record Lows on Bankruptcy Fears
Shares of First Republic Bank (FRC:US) paused for volatility on Wednesday after they opened over 12% lower.
On Tuesday, the stock dropped 49% after CNBC reported that the bank’s advisers are working on a list of potential buyers of new stock as part of a rescue plan. FRC shares are down more than 95% year-to-date.
The latest wave of selling was triggered after the bank said on Monday it lost about 40% of all deposits in the first quarter. As a result, the bank was forced to consider strategic options as it looks to boost its liquidity.
Jim Herbert, Founder and Executive Chairman, and Mike Roffler, CEO and President of First Republic said, “With the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business. We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.”
One of the options discussed is that larger banks, which already deposited $30 billion into FRC in March, inject more money by acquiring some assets “at above-market rates,” the CNBC report added.
While this is not something that traditional banks would consider, First Republic’s management is trying to convince them that allowing the bank to fail would be a much more expensive option.
Moreover, CNBC reported that the U.S. government is “unwilling to intervene” at the moment.
Congress members Daniel Goldman and Ro Khanna both reported the sale of FRC shares on March 15, when the stock closed at $31.16. Rep. Khanna was previously buying the stock while it was trading above $80 per share.
FRC stock trades below $7 a share on Wednesday.
