First Republic’s Potential Aid from Big Banks Lifts Shares from Lows

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After CNBC’s David Faber reported that major U.S. banks are discussing a rescue plan for First Republic, which could include approximately $30 billion in deposits, the shares of First Republic rebounded and regional bank stocks climbed higher.

Following the news, First Republic’s shares saw an 8% increase, after having been down over 30% earlier in the day. The SPDR S&P Regional Bank ETF (KRE) saw a 3.8% rise, and Western Alliance and PacWest gained 12% and 1%, respectively, after having declined earlier in the session.

Following the collapse of Silicon Valley Bank last Friday, investors are now struggling to find other regional banks that share similar balance sheet problems, such as a high percentage of uninsured deposits and bonds or loans with lengthy maturity periods, CNBC reports.

Raymond James reported that First Republic had the third-highest rate of uninsured deposits among U.S. banks, behind SVB and Signature Bank, which regulators closed over the weekend.

The stock of First Republic had dropped nearly 75% in March as of Wednesday’s close, and both S&P Global Ratings and Fitch Ratings had downgraded the bank’s debt.

Written by staff