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Shares in the US regional bank First Republic Bank fell another 15 per cent on Wednesday, a day after plunged to an all-time low after the mid-sized lender revealed that customers withdrew $100 billion worth of US deposits in the first quarter.
Shares in the California-based bank were changing hands for less than $7 US each in premarket trading on Friday. It fell from $16 on Monday and $120 at the start of March, before the US banking sector was gripped by fears of contagion in the fallout from the collapse of Silicon Valley Bank.
The bank is the latest US lender to launch a bank crackdown, where depositors have moved to withdraw money en masse from banks deemed to be in trouble. Such a move tends to exacerbate whatever problems the bank had in the first place, creating a vicious cycle of negativity.
The bank’s earnings report on Monday revealed that the lender posted a profit of $269 million in the last quarter on a profit of more than $1.2 billion, both down slightly from last year. But investors were far more concerned with the bank’s net loss of deposits during the quarter: $100 billion.
“With the closure of several banks in March, we experienced an unprecedented outflow of deposits,” said chief financial officer Neal Holland.
The bank said it was pursuing “strategic options” to improve its capital position, a plan that could include selling assets to raise money, or creating a so-called bad bank – where any toxic or money-losing assets would be carved out. and placed it into a new entity, leaving the bank still healthy.
At least three brokerages have cut their price targets on First Republic stock since it reported first-quarter earnings on Monday.
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