First Republic Bank, a San Francisco-based lender, has seen its shares plummet to a record low after the bank revealed that depositors withdrew over $100bn. This news has sparked fears of further bank collapses, following the failures of Silicon Valley Bank and Signature Bank. The stock closed down nearly 50 percent on Tuesday, and the bank has lost 40 percent of its deposits in the first quarter. This comes as the banking sector is facing its biggest crisis of confidence since the 2007-2008 financial crash.
The collapse of Silicon Valley Bank and Signature Bank last month drove fears of contagion across the banking sector, and investors have been closely watching the financial health of regional lenders such as First Republic since. Other banks in the United States also saw their share prices register significant falls, including Western Alliance Bancorporation, Zions Bancorp and JPMorgan.
First Republic has revealed that it is considering “strategic options” to strengthen the bank’s position. The bank’s recovery plan includes selling off unprofitable assets and laying off up to a quarter of its workforce of about 7,200 employees.
Investors have questioned whether First Republic has a future as either an independent lender or as part of a bigger bank. Christopher Wolfe, head of North American banks at Fitch Ratings, said any potential buyer of First Republic would be looking at a big write down in the value of the lender’s assets.
“The options are very challenging and probably very costly, especially for shareholders,” Wolfe told the Reuters news agency. “Who’s going to bear the cost?
According to latest reports First Republic Bank is expected to be seized by the US government. According to Fox’s Charles Gasparino, bankers working with First Republic say that they expect eventual government receivership for the ailing bank. This will come after it exhausts private sector solutions such as asset sales and finding a buyer, both of which “appear difficult.”