a consortium ready to supply 30 billion – Corriere.it
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US bank First Republic now under fire and some fear it could be the next domino to fall after the failure of three US banks. Shares of the company fell about 20% as of midday on March 16 on the New York Stock Exchange, after having already lost 21% the previous day and 73% since March 8. The stock fell further on the open after an article by Bloomberg wrote that First Republic is exploring “strategic options” for its future, including a possible sale. The stock then recovered some ground after the Wall Street Journal reported the news that a group formed by the major US banks is ready to provide the bank between 20 and 30 billion dollars. The group includes Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup and other banks. The agreement has not yet been reached and the plan does not include a takeover of First Republic Bank.
Top managers sold 11.8 million shares
In the two months before the stock crash, First Republic Bank top executives sold $11.8 million in stock. The executive chairman, James Herbert, has sold $4.5 million worth of stock since the start of the year; the risk manager sold shares on March 6, two days before the crash began. The average selling price by top executives since the beginning of the year has been just under $130 per share. Today, the stock is down 10.17% to $27.99. The stock has now been downgraded to “junk” by S&P Ratings and Fitch Ratings.
It is the 14th largest bank in America
First Republic, founded in 1985 and headquartered in San Francisco, the 14th largest US bank by assets. It provides private banking, corporate banking and wealth management services with offices primarily in California, but also on the East Coast (New York, Massachusetts, Connecticut, Florida), Oregon, Washington and Wyoming. But the profile of its client base has recently become a weak point after the near bankruptcies of Silicon Valley Bank, Signature Bank and Silvergate, banks that had focused on specific sectors of activity, the technological world for SVPs and that of cryptocurrencies for Signature Bank and Silvergate. According to S&P Global Ratings, 68% of First Republic’s deposits consist of accounts exceeding $250,000, the limit usually guaranteed by the authorities. Although the clients come from a wide range of economic sectors, it is feared that many of them prefer to move their money to risk-free banks because they are too big for regulators to let them close.
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