First Republic continues its dramatic slide because it searches for a rescue deal

Los Angeles, CA – March 13: People pass by First Republic Bank Downtown on Monday, March 13, 2023 in Los Angeles, CA.

Dania Maxwell | Los Angeles Times | Getty Images

First RepublicThe stock fell again on Wednesday as investors eyed a potential bailout deal for the ailing regional bank.

Shares fell more than 20% in morning trade, extending losses of nearly 50% on Tuesday. The stock is down more than 90% year-to-date and hit an all-time low on Wednesday after being halted multiple times due to volatility.

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First Republic stock was under renewed pressure on Wednesday.

This week’s decline for First Republic comes after the San Francisco-based lender said late Monday that it lost about 40% of its deposits in the first quarter. First Republic was viewed as a risky bank by customers and investors alike following the collapse last month of Silicon Valley Bank, which had a similar financial profile.

First Republic also said in its quarterly report Monday that it was reviewing strategic options to help transform its balance sheet.

The sharp fall in deposits came even as a group of 11 larger banks had deposits of 30 billion First Republic advisors are trying to persuade at least some of those banks to provide further support by overperforming some of First Republic’s assets Buy prices, as CNBC learned.

Those purchases would result in losses for the other banks, but First Republic’s advisors are trying to sell the banks with the idea that it would be even more expensive to let First Republic fail if it resulted in even higher regulatory costs and fees .

According to sources, if First Republic manages to sell some of its assets, it will seek to raise equity, which would dilute current shareholders.

Sources told CNBC’s David Faber on Wednesday that government officials are currently unwilling to intervene in the First Republic’s rescue process.

— CNBC’s Hugh Son contributed to the coverage.

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