Shares in First Republic Bank fell another 47% on Monday as investors remained concerned about the bank’s financial health even after a group of the country’s largest financial institutions teamed up for a $30 billion bailout.
Trading in First Republic stock has been halted multiple times due to volatility. Shares are down about 88% in the past two weeks.
First Republic Bank last week received a $30 billion bailout from 11 of the largest US banks to avoid collapse. The bank’s credit rating was downgraded over the weekend by S&P Global Ratings, which said the bailout should alleviate near-term liquidity pressures but that it “may not address key business, liquidity, financing and profitability,” said the San Francisco-based bank. bank is probably in the front right now.
Volume exceeded 184 million shares compared to the daily average of less than 14 million shares. Shares closed at $12.18, down 47% after hitting an all-time low of $11.52 in intraday trading.
In other banking news: The bidding process for the Federal Deposit Insurance Corp. extended. to have more time to work out a possible deal.
The FDIC said Monday there is “considerable interest” in Silicon Valley Bridge Bank from various parties. The agency said it will allow parties to submit separate bids for Silicon Valley Bridge Bank and its subsidiary, Silicon Valley Private Bank, to simplify the bidding process and expand the pool of potential bidders.
Qualified Insured Banks and Qualified Insured Banks working with non-banking partners may submit full banking offers or bids for the deposits or assets of the Institutions. Banks and non-bank financial firms are allowed to bid on portfolios of assets.
Bids for Silicon Valley Bridge Bank are due Friday at 5 p.m. Pacific time; Bids for Silicon Valley Private Bank must be submitted Wednesday at 5 p.m. Pacific time.
On Friday, Silicon Valley Bank’s parent company filed for Chapter 11 bankruptcy protection; Silicon Valley Bridge Bank was not included in the Chapter 11 filing.
SVB Financial Group is no longer affiliated with Silicon Valley Bank following the FDIC seizure. The collapse was the second-largest bank collapse in U.S. history, after the 2008 collapse of Washington Mutual.
The closures of Silicon Valley Bank and New York-based Signature Bank brought back bad memories of the financial crisis that plunged the United States into the Great Recession of 2007-2009.
Determined to restore public confidence in the banking system, the federal government took steps to protect all bank deposits, even those that exceeded the $250,000 per person FDIC limit.
Banking industry turmoil has spread to Europe, forcing a deal in which UBS will acquire ailing rival Credit Suisse for nearly $3.25 billion. The deal was orchestrated by Swiss regulators. UBS shares rose 3.3%.
The FDIC said late Sunday that New York Community Bank had agreed to buy a significant portion of the failed Signature Bank in a $2.7 billion deal.
Shares in New York Community Bancorp were up 32%.
Despite all the concerns in the banking sector, shares on Wall Street rose Monday after steps were taken to restore confidence in the banking sector.
Source: LA Times