First Republic Bank fights for existence
Regional bank First Republic plans rescue strategy with bond purchases by major banks

The US regional bank First Republic is currently fighting for survival. After the collapse of two U.S. regional banks in March, the banking crisis seemed to be over - but now another financial institution in the U.S. is tottering. In a panic reaction, customers are withdrawing money on a massive scale. The situation at First Republic is precarious: After the bank published its quarterly report, the share price plummeted and is now only at 5.69 dollars. This means that the shares have lost more than 90 percent of their value since the beginning of the year, and this week alone they have lost almost 40 percent.
The market value of First Republic, which has total assets of $233 billion, fell to about $888 million, below the one-billion-dollar mark for the first time. As of November 2021, the regional bank, which is headquartered in San Francisco, still had a market value of more than $40 billion. The "fear of another banking quake" has returned to the minds of investors, said market expert Timo Emden.
In March, Silicon Valley Bank and Signature Bank had collapsed. That shook customer confidence in U.S. regional banks - fearing another small bank collapse, customers at First Republic withdrew funds in a big way. Deposits plunged 41 percent in the first quarter to $104 billion from about $176 billion at the end of 2022.Of those deposits, $30 billion are bailout money from 11 major U.S. banks, which in March sought to stabilize the institution and send a signal of confidence.
But the situation remains critical. First Republic Bank is receiving $30 billion from other banks, but the financial institution is still in danger of collapse. The bank was known for issuing large mortgages to wealthy customers at favorable rates. But the increase in the prime rate, which is now 5.0 percent in the U.S., has caused its mortgages to lose considerable value. Those who have already ticked off the banking crisis may have done so too soon, said portfolio manager Thomas Altmann of wealth advisor QC Partners.
Clifford Bennett of ACY Securities goes a step further, predicting the end of First Republic Bank. While the institution is trying out all possible rescue strategies, it continues to slide inexorably, he said. But the bank is not about to surrender without a fight. As U.S. stock market broadcaster CNBC has learned, First Republic plans to have major U.S. banks buy bonds issued by the regional bank. This could ensure that operations can continue.
