First Republic Bank and regional peers are tumbling again Thursday, extending a drop amid the continued fallout from the collapse of Silicon Valley Bank.
(Bloomberg) — First Republic Bank and regional peers are tumbling again Thursday, extending a drop amid the continued fallout from the collapse of Silicon Valley Bank.
The lender’s shares gave up early gains to fall as much as 10%. The dip adds to the California-based bank’s recent selloff amid a broader upheaval in regional banks stocks. First Republic has plunged more than 90% this year and erased about $20 billion from its market value. Treasury Secretary Janet Yellen sparked another slump when she said regulators weren’t looking to provide “blanket” deposit insurance to stabilize the US banking system.
PacWest Bancorp is on track to close at a record low while Comerica Inc., and Zions Bancorporation were among the worst performing stocks in the S&P 500 Index Thursday, falling more than 5% each. A Truist Securities analyst slashed his price targets on more than two dozen names across lenders earlier.
First Republic has plummeted over the past few weeks amid growing turmoil in the industry. The swift demise of three banks, including Silicon Valley Bank, spurred worries over liquidity and saw clients pull funds.
Regional banks are mostly lower in afternoon trading, with the KBW Regional Banking Index sliding 2%. Federal Reserve Chair Jerome Powell pushing back against market speculation that the central bank will cut rates this year added to the pressures on financial stocks this week.
Wall Street lenders and US officials are looking at the possibility of government backing to encourage a deal that would shore up First Republic, Bloomberg News reported earlier this week, citing people with knowledge of the situation.
Sentiment remains fragile. Fitch Ratings downgraded First Republic, citing its new more costly funding profile, following S&P Global Inc.’s downgrade over the weekend. Citigroup Inc. analysts moved the lender’s rating to “under review” on Wednesday given volatility in the shares.
Still, the downward tilt on Thursday is somewhat tame compared to the volatile swings of recent days. After plunging 20% through the two prior weeks, the KBW Regional Banking Index is on track to end the week down over 1%.
“Every day without a bank failure is a win for the sector,” said Chris Marinac, an analyst at Janney Montgomery Scott.
(Updates details throughout.)
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