Is First Republic Bank Next To Fail? Firm “Diversifies” Portfolio With Help From JPMorgan
First Republic Bank (NYSE: FRC) said that it has strengthened its financial position with new support from the Federal Reserve and JPMorgan Chase & Co.
The new loan provides $70 billion in unused liquidity to the bank, which was under pressure following the collapse of SVB Financial Corp. (NASDAQ: SIVB) last week. This does not include funds that First Republic may be able to borrow through a new Fed lending tool created to assist banks in meeting withdrawals.
“The additional borrowing capacity from the Federal Reserve, continued access to funding through the Federal Home Loan Bank, and ability to access additional financing through JPMorgan Chase & Co. increases, diversifies, and further strengthens First Republic’s existing liquidity profile,” the bank said in a statement.
Executive Chairman Jim Herbert and CEO Mike Roffler both assert that the bank’s capital and liquidity positions “are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks.”
The infusion is the first of its kind for a group of midsize banks that have ran into problems in the last week. Silvergate Capital Corp. (NYSE: SI) announced its closure on Wednesday after a gamble on cryptocurrency consumers resulted in massive losses.
Following a bank run, authorities seized SVB on Friday. Signature Bank (NASDAQ: SBNY), situated in New York, suffered the same fate on Sunday, with the state certifying body electing to take control of the bank.
READ: Silicon Valley Bank Depositors To Be Made Whole While Signature Bank Also Shuttered
Last week, investors became concerned that First Republic had a similar profile to SVB. First Republic’s stock has dropped approximately 30% since Wednesday, and several clients became wary of leaving their deposits at the bank.
First Republic Bank last traded at $81.76 on the NYSE, before plummeting around 65% in the pre-market trading to a current $29.64.
Information for this briefing was found via The Wall Street Journal and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
