First Republic Bank’s stock has experienced a 60% decline in pre-market trading as the US financial institution attempts to address concerns regarding its liquidity after the collapse of Silicon Valley Bank.
First Republic Bank has assured investors that it possesses more than $70bn in untapped liquidity, which is enough to fund its operations in accordance with agreements made with JP Morgan and the US Federal Reserve.
Nevertheless, traders have rapidly sold First Republic’s shares in response to the news, with regional banks feeling the pressure after the fall of SVB on Friday.
The crisis in the sector has rapidly spread, as regulators reported the seizure of New York-based Signature Bank, with assets of over $110bn, on Sunday, marking the third-largest bank failure in US history.
Shares of Phoenix-based Western Alliance Bancorp have experienced a 46% decline in pre-market trading, while Los Angeles-based PacWest Bancorp has plunged 36%. Meanwhile, trading in Signature Bank’s shares, SVB’s peer, was closed on Sunday after its stock price fell sharply. Federal regulators have taken over the bank just days after the collapse of Silvergate and Silicon Valley Bank, both of which were crypto-friendly banks.
UK banking stocks across the FTSE 100 and FTSE 250 have plummeted nearly 4%, despite HSBC’s £1 acquisition of SVB’s UK arm, which avoided a taxpayer bailout and ensured access to deposits for thousands of British tech companies.
However, the rescue has yet to reassure markets, with FTSE 100 falling 2.3%, and FTSE 250 experiencing a 2.9% decline. HSBC shares have declined by as much as 3.7% despite the acquisition announcement, with Lloyds, Barclays, and Natwest falling by 4.8%, 4.9%, and 4.2%, respectively.
As the markets worry about European banks in the wake of the collapse of US lender SVB, Credit Suisse’s shares have plummeted by over 14%, reaching a new historic low.
Switzerland’s second-largest bank suffered a rapid decline on the Swiss stock exchange, with its shares falling by 14.3% to 2.139 Swiss francs. Other European banks have also taken a hit, with Commerzbank in Germany down 12%, Santander in Spain shedding 7.4%, and ING in the Netherlands falling 8.3%.
Since the bankruptcy of the UK financial firm Greensill in March 2021, Credit Suisse has lost 81% of its value in the aftermath of a series of scandals that have weakened the Zurich-based bank. These shocks have prompted Credit Suisse to launch a significant restructuring effort, but the bank’s value has continued to decline on the stock market.
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