Shares of First Republic Bank plunged to a record low on Friday, losing nearly half of their value after a CNBC report said the troubled lender was most likely headed for receivership under the U.S. Federal Deposit Insurance Corporation (FDIC).
The shares of the bank fell to an all-time low of $3.09 as if 11.44am in New York. This happened after shares rose as much as 6.6% earlier, banking on reports of meetings to devise a plan for the bank.
The meeting was slated to take place between US officials with the Federal Deposit Insurance Corp., the Treasury Department and Federal Reserve orchestrating meetings about throwing a lifeline, Reuters reported, citing unidentified people.
First Republic Bank is most likely headed for Federal Deposit Insurance Corp (FDIC) receivership, CNBC reported on Friday citing sources.
Shares sank to a fresh all-time low of $3.09 as of 11:44 a.m. in New York, after rising as much as 6.6% earlier on reports of meetings to devise a plan for the bank.
First Republic’s plunge has wiped out more than $21 billion in market value this year, making it the smallest S&P 500 Index member by value.
Some of the biggest US banks have already contributed $30 billion in deposits to prop up First Republic, and they have balked at getting more involved and potentially throwing good money after bad, Bloomberg reported. Some of them favor the FDIC seizing First Republic, an action the agency would prefer to avoid in part because of the multibillion-dollar hit to its deposit insurance fund.
First Republic has been under pressure ever since SVB’s demise stoked concerns about the soundness of other regional banks in the US. First Republic was left paying more for funding than it earns on many of its assets, meaning it faces what analysts predict will be at least a year of losses.
The bank’s executives emphasized in an earnings report earlier this week that it has ample cash reserves. Still, its leaders acknowledged that they are looking for strategic options.