(Bloomberg) — Shares of First Republic Bank rose in pre-market trading as the US banking industry and regulators ponder possible paths forward for the troubled regional lender.
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The San Francisco-based bank gained as much as 14% in New York. The stock has plunged 95% this year through Thursday as the company struggles to navigate the turmoil in the aftermath of the collapse of Silicon Valley Bank and two other regional banks in March.
US officials are reportedly coordinating talks to rescue First Republic Bank with the Federal Deposit Insurance Corp., the Treasury Department and Federal Reserve orchestrating meetings about throwing a lifeline, Reuters reported, citing unidentified people.
Some of the biggest US banks have already contributed $30 billion in deposits to prop up First Republic, and they have balked at getting more involved and potentially throwing good money after bad, Bloomberg reported. Some of them favor the FDIC seizing First Republic, an action the agency would prefer to avoid in part because of the multibillion-dollar hit to its deposit insurance fund.
While the stock is moving higher, either scenario is perilous for current holders. Analysts have said the existing shares have little or no value, regardless of whether the bank is salvaged by new owners or goes into receivership.
First Republic has been under pressure ever since SVB’s demise stoked concerns about the soundness of other regional banks in the US. First Republic was left paying more for funding than it earns on many of its assets, meaning it faces what analysts predict will be at least a year of losses.
The bank’s executives emphasized in an earnings report earlier this week that it has ample cash reserves. Still, its leaders acknowledged that they are looking for strategic options.
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Source: https://finance.yahoo.com/news/first-republic-shares-gain-reports-111353862.html