First Republic bank in limbo as shares fall further

First Republic Bank’s shares plummeted by 43% on Friday, after experiencing a massive drop in deposits. Its value has dropped from US$40bn to US$654m, with experts speculating that the most likely scenarios include the sale of the bank or its assets to other financial players, following a receivership by the FDIC. However, the negative value of First Republic’s loans could cause a loss in value for prospective buyers. Meanwhile, former FDIC Chair Sheila Blair is worried that not protecting uninsured deposits could surprise people and be disruptive.

First Republic Bank shares dive on 40% drop in deposits

First Republic Bank lost over 40% of its deposits in Q1 2023, but the situation stabilized since late March. The bank’s shares fell more than 20% in after-hours trading following its first earnings report since Silicon Valley Bank and Signature Bank’s failures last month, which led to emergency measures to fortify the industry. First Republic announced cost-cutting measures, including a 20% to 25% workforce reduction, the condensing of corporate office space, and significant cuts in executive compensation.

US regulator sells failed Signature Bank assets to another lender

Flagstar Bank will take over deposits and some loan portfolios of failed Signature Bank, according to the Federal Deposit Insurance Corporation. The bank’s 40 branches will open under Flagstar on Monday, but $60 billion in loans and $4 billion in deposits related to Signature Bank’s digital banking business will remain under the regulator’s control. Meanwhile, the FDIC is seeking to sell the failed Silicon Valley Bank in at least two parts after a massive wave of withdrawals from the bank sparked fears of contagion across the industry.

Asian markets sink as Credit Suisse fuels bank contagion fears

Asian markets dropped due to contagion fears after Credit Suisse’s annual report cited “material weaknesses” in internal controls, with the bank losing nearly 25 per cent of its value. Investors have been jittery since two US banks collapsed over the weekend, sparking fears of a global recession. The crisis has hit oil prices and compounded existing worries over potential Federal Reserve interest rate hikes. The UK’s FTSE 100 fell 3.8 per cent, while bank shares were hit worldwide, including JP Morgan, Commerzbank and Barclays, and First Republic Bank lost over 20 percent in New York.