First Republic Reverses 36% Plunge As US Pushes Bank Rescue
First Republic Bank shares are slumping in premarket trading on Thursday following a Bloomberg News report that the company is weighing options that include a sale.
(Bloomberg) -- First Republic Bank reversed a 36% plunge as some of the nation’s largest lenders were nearing a US government-orchestrated deal to deposit about $30 billion in an effort to stabilize the bank.
Shares were 11% higher at $34.46 as of 1:30 p.m. in New York, after dropping as low as $19.80. Regional banks followed suit, with Western Alliance Bancorp and PacWest Bancorp also reversing earlier slides. The KBW Regional Bank Index climbed as much as 5.7%
Read more: First Republic Poised to Get $30 Billion in Deposits in Rescue
Banks including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp., Wells Fargo & Co., Morgan Stanley and PNC Financial Services Group Inc. are part of the discussions, according to people familiar with the matter. Details of the rescue, which are still being worked out, may be announced as soon as Thursday, the people said.
“The unique private-public strategy to shore up First Republic’s deposit base signals the government’s intention to keep the bank in business,” Bloomberg Intelligence analyst Herman Chan wrote.
The reversal stems a slide that had erased more than $17 billion off First Republic’s market capitalization this month amid fallout from the collapse of three banks, including regional lender Silicon Valley Bank.
First Republic specializes in private banking and wealth management, and has tried to differentiate itself from Silicon Valley Bank.
Investors across the banking space are on tenterhooks amid the upheaval in US regional lenders as well as the tumult surrounding Credit Suisse Group AG. Shares of the Swiss bank rebounded Thursday after it opened a $54 billion line of credit with the country’s central bank and offered to buy back debt. The European Central Bank delivered a planned half-point hike in interest rates on Thursday.
On Wednesday, First Republic shares sank 21% as its credit rating was cut to junk by S&P Global Ratings and Fitch Ratings. The bank said Sunday that its total available unused liquidity to fund operations was more than $70 billion, from agreements that included the Federal Reserve and JPMorgan Chase & Co.
--With assistance from .
(Updates to add Bloomberg Intelligence commentary and latest trading starting in second paragraph.)
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