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First Republic Bank shares hit record low, plans mass layoff at year end
First Republic Bank shares plunged 39.2% on Wednesday, an ongoing rout that has erased over 50% of its value just this week. The bank plans to layoff up to a quarter of its workforce, which totaled about 7,200 employees at the end of last year
First Republic Bank shares plunged 39.2% on Wednesday, an ongoing rout that has erased over 50% of its value just this week on concerns about the bank's financial health and a media report that the US government was unwilling to intervene in the bank's rescue process.
The lenders shares were last down 20% at $6.51, after losing nearly half of their value on Tuesday.
A CNBC report citing sources said the US government officials were currently unwilling to intervene in the First Republic rescue process.
Earlier, on Monday the lender said it a group of large banks have stepped in to save it by depositing $30 billion in uninsured deposits.
The bank now is looking at several options, and is also planing to sell off unprofitable assets, including low interest mortgages it provided to wealthy clients. It also has plans to layoff up to a quarter of its workforce, which totaled about 7,200 employees at the end of last year, news agency AP reported.
The bank advisers have lined up potential purchasers of new stock in the lender if they can fix the bank's balance sheet, a report said earlier today.
However, some analysts have highlighted several roadblocks which could complicate rescue efforts for the lender as it looks to emerge out of the crisis sparked by an outflow of more than $100 billion in deposits in the first quarter.
Citi analyst downgraded First Republic on Wednesday, saying in a note to clients that there's still a large level of uncertainty in outcomes and expected losses beyond the next year.
At least three brokerages have cut their price targets on First Republic's shares since it reported first-quarter earnings on Monday.
First Republic reported first-quarter results Monday that showed it had $173.5 billion in deposits before Silicon Valley Bank failed on March 9. On April 21, it had deposits of $102.7 billion, which included the $30 billion the big banks deposited. It said since late March, its deposits have been relatively stable.
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Business NewsIndustryBankingFirst Republic Bank shares hit record low, plans mass layoff at year end
First Published:26 Apr 2023, 07:51 PM IST
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