Third American bank to shut down? First Republic Bank shares dip nearly 70% after SVB collapse
Following the failure of Silicon Valley Bank, Moody's Investors Service put First Republic Bank and five other US lenders under review for a downgrade.
First Republic Bank shares dropped a record 67% at the opening despite the bank's declaration late Sunday that it had more than $70 billion in unopened liquidity to sustain operations from pacts, including those with the Federal Reserve and JPMorgan Chase & Co. The influence on other large banking institutions in the stock market persisted days after the fall of the US-based Silicon Valley Bank.
Following the failure of Silicon Valley Bank, Moody's Investors Service put First Republic Bank and five other US lenders under review for a downgrade. This is the most recent indication of concern regarding the stability of local financial institutions.
The additional lenders that Moody's put under examination included Western Alliance Bancorp, Intrust Financial Corp., UMB Financial Corp., Zions Bancorp., and Comerica Inc. The credit rating agency expressed concern about the lenders' dependence on uninsured funds liquidity as well as unrealized losses in their investment portfolios.
The First Republic Bank shares, according to Bloomberg, have decreased by 61.83%. First Republic Bank Stock's price has dropped by 74.25% in the past week. Its price hit a low point of $ 19 per share upon the last past trading day. Before the financial crisis, Silicon Valley Bank and Signature Bank displayed similar patterns.
Before trading was suspended, regional lenders PacWest Bank (PACW) had 82% decline whereas Western Alliance Bancorp (WAL) plummeted by over half, Wion reported.
Silicon Valley Bank Collapse
A bank run, one of the most common issues in the banking sector, caused The Silicon Valley Bank to collapse. The bank fell as depositors, especially technology workers and venture capital-backed enterprises, began pulling their money triggering a run on the bank.
After Washington Mutual's downfall at the peak of the economic downturn more than ten years ago, it was one of the biggest financial corporation disasters in US history. The decline in technology stock prices and the Federal Reserve's intention to raise interest rates in an effort to fight inflation both had an impact on the SVB bank.
Veteran American investor Bill Ackman has hinted that additional names could be added to the list of banks that are drowning in the disaster that is the US banking industry. Many banks will be impacted by Silicon Valley Bank. Even with the United States Authority's action, many banks could still fail, according to Ackman.