- April 22, 2022 2:40 PM
- February 21, 2023 7:05 PM
- September 21, 2019 7:01 AM
New York, United States - Shares of First Republic Bank slumped early Friday as Wall Street stocks opened lower, a sign of lingering worries over the banking sector despite extraordinary protective measures by US authorities and private lenders.
Near 1400 GMT, shares of First Republic were down about 17 percent, resuming a fall that paused Thursday when a consortium of major US banks said they would deposit $30 billion to shore up the embattled California lender.
The move lower echoed the dynamic for Credit Suisse, another bank facing questions, which fell sharply Friday on the Swiss exchange.
"The question becomes is that enough?" said Quincy Krosby of LPL Financial.
Despite developments yesterday, there remain "questions about the strength of the underpinning of the financial system," Krosby added.
About 30 minutes into trading, the Dow Jones Industrial Average was down 0.8 percent at 31,998.79.
The broad-based S&P 500 dropped 0.5 percent to 3,942.65, while the tech-rich Nasdaq Composite Index was flat at 11,720.27.
Following the failures of Silicon Valley Bank and Signature Bank, First Republic became the focal point of worry because of its heavy holdings on uninsured deposits -- making it comparable to SVB, which crumbled following a run on deposits.
In praising the agreement by JPMorgan Chase, Citigroup and other large US banks, First Republic also disclosed that it suspended its dividend and had borrowed from the Federal Reserve between $20 billion and $109 billion under overnight borrowing in a five-day stretch starting March 10.
Among other banks, Comerica fell 7.3 percent, while KeyCorp was down 5.0 percent. Citigroup and Bank of America each dropped about three percent.
Analysts say the distress in the banking sector will result in more cautious lending policies, adding to the challenges facing the economy.
© Agence France-Presse