Apr 28 (Reuters) – Shares in First Republic Bank (FRC.N) plunged nearly 32% on Friday after a CNBC report said the troubled lender was most likely placed under the US Federal Deposit Insurance Corporation (FDIC). became.
Its shares last traded at $4.21 after gaining as much as 6.6% at the start of the session.
Earlier Friday, Reuters reported that the FDIC, Treasury Department and Federal Reserve are among government agencies that have begun orchestrating meetings with financial firms over a lifeline for the bank.
The government’s involvement is helping bring more parties, including banks and private equity firms, to the negotiating table, one of the sources told Reuters.
Still, concerns remain that First Republic’s drop in deposits could worsen and trigger another meltdown in the US banking industry, even as it recovers from the collapse of two regional lenders last month.
First Republic announced earlier this week that its deposits collapsed by more than $100 billion in the first quarter.
“The potential worst-case scenario of the Silicon Valley bank collapse appears to have been averted,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a statement.
“But the problems at First Republic are a reminder that more problems remain possible.”
Shares of the San Francisco-based lender have more than halved so far this week. It’s down almost 95% of its value since the beginning of the year, making it the worst-performing S&P 500 stock (.SPX).
Meanwhile, the Federal Reserve will release an internal review of its oversight of Silicon Valley Bank on Friday, April 28 at 11 a.m. ET (1500 GMT).
Reporting by Medha Singh in Bengaluru; Adaptation by Saumyadeb Chakrabarty
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