A trader works at the post where First Republic Bank stock is traded on the floor of the New York Stock Exchange (NYSE) in New York City, March 16, 2023.
Brendan McDermid | Reuters
Shares of Bank of the First Republicwhich have become the barometer of the regional banking crisis fell again Monday after Standard & Poor’s downgraded the credit rating of the San Francisco-based institution, but shares of rival banks rose.
S&P downgraded its credit rating for First Republic to B+ from BB+ on Sunday after first downgrading to junk status last week. The rating remains at CreditWatch Negative, according to S&P.
The stock fell nearly 19% in premarket trading on Monday, adding to a more than 80% decline this month that came as the collapse of Silicon Valley Bank caused investors to rethink other banks with large uninsured deposit bases.
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First Republic Bank, 1 day
Despite the decline of the First Republic, the SPDR S&P Regional Banking ETF was slightly higher on Monday, a 3% increase in premarket trading. PacWest Bancorp jumped 16% while Key Corp And Zion Bank Corp climbed 4% each.
And shares of New York Community Bancorpwhich agreed to buy closed Signature Bank this weekend, rose more than 30% in premarket trading.
On Thursday, a group of major banks agreed to pour $30 billion into First Republic to bolster confidence in regional banks. But the bank also suspended its dividend, saying it had about $34 billion in cash through March 15, not counting new deposits.
“The deposit injection from 11 U.S. banks, the company’s disclosure that Fed borrowing ranges from $20 billion to $109 billion and Federal Home Loan Bank (FHLB) borrowing has increased by $10 billion, and the suspension of the common stock dividend collectively led to We believe the bank was likely under high liquidity pressures with significant deposit outflows over the past week,” S&P said in its Sunday note.
UBS bought Credit Suisse over the weekend in a forced partnership facilitated by Swiss regulators to prevent the banking crisis from spreading worldwide. Credit Switzerland executives noted that the turmoil in US regional banks created enough instability that it forced the already shaky institution to merge with its rival.
This is an evolving story. Check back later for updates.