(Reuters) – The market value of First Republic Bank (FRCN) fell below $1 billion for the first time ever on Wednesday after a report that the US government was unwilling to get involved in the bailout hurt the bank’s stock.
After a brutal sell-off, the bank’s market capitalization was around $886 million at its lowest point on Wednesday, a far cry from its peak of over $40 billion in November 2021.
US government officials are currently unwilling to get involved in the First Republic bailout, CNBC says mentionedCiting sources.
An informed source told Reuters on Tuesday that the bank is looking at several options, such as selling assets or setting up a “troubled bank”.
A bad banking prospect is a crisis type method of isolating problematic financial assets.
Trading in First Republic shares has been halted several times. The stock was last down 30% at $5.66.
First Republic advisors have already pooled potential buyers of new shares in the lender if they can fix the bank’s balance sheet, a report Earlier on Wednesday he said.
However, analysts have highlighted several roadblocks that could complicate rescue efforts for the San Francisco-based bank as it appears to be emerging from the crisis caused by an influx of more than $100 billion in deposits in the first quarter.
“The (First Republic) assets will be sold but it may take some time and they can be sold at a very steep discount,” said David Wagner, portfolio manager at Aptos Capital Advisors.
At least three brokerages have lowered their price targets for First Republic shares since they reported first-quarter earnings on Monday.
“First Republic’s problems are likely to be idiosyncratic … and they clearly have an agonizing road ahead,” said Art Hogan, chief market strategist at B Riley Wealth in Boston.
A string of earnings reports from regional banks last week had reassured investors, but the banking sector came under renewed pressure after First Republic’s results.
The KBW Regional Banking Index (.KRX) has lost 4.4% so far this week.
Additional reporting by Nikit Nishant in Bengaluru; Edited by Shounak Dasgupta
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