Jim Cramer is looking for solutions to calm the ongoing financial sector crisis, with his latest call being to ringfence First Republic Bank (NYSE: FRC).
The Mad Money host made the suggestion on Twitter after the bank has seen continuous volatility in the market following the collapse of three banks in the United States, along with acquisition of Credit Suisse by UBS Group.
“$FRC can be ringfenced by putting it in receivership and ending this charade,” Cramer commented, suggesting that it is impossible to know the current outflows of the bank, which makes it difficult to value.
The latest volatility in First Republic follows the name seeing its credit rating cut for the second time in a week, with S&P downgrading the rating from BB plus to B plus. In assigning the rating, the agency stated that the “$30 billion in deposits that First Republic reported it will receive from 11 large U.S. banks should ease near-term liquidity pressures,” but those funs may not resolve the substantial challenges facing the firm.
Furthermore, First Republic is said to remain on CreditWatch negative, implying that the current rating could be downgraded for a third time. Such a downgrade would come, as per S&P, if the bank is unable to show progress in stabilizing deposits and “recovering franchise value that, in [their] view, has likely eroded.”
At last tally, the bank has seen $70 billion in deposits vacate the firm since the start of the year, as per the Financial Times.
The volatility has resulted in the equity being halted 11 times in today’s session as of the time of writing.
Information for this briefing was found via Edgar, Twitter, Financial Times 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.
