First Republic Bank Falls on Finance Sector Jitters in Europe

(Bloomberg) — First Republic Bank extended its slump Friday on the heels of another downgrade and as the financial turmoil spread to a European lender.

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Shares of First Republic fell as much as 6.6% in premarket trading, putting the stock on track to decline for the fifth time in the last six sessions after Moody’s lowered the banks’ originator assessment late Thursday.

Adding to the pressures on the financial sector, Deutsche Bank AG slumped as much as 15% — the biggest decline since the early days of the pandemic in March 2020 — after the German lender said it was looking to redeem a tier 2 subordinated bond early.

US regional banking stocks slumped, with PacWest Bancorp, Western Alliance Bancorp and KeyCorp all dropping 3% or more before the bell.

“The banking crisis is far from over and the impact on credit conditions and the economy will likely be felt over the next six months,” said Peter Garnry, a strategist at Saxo Bank.

These moves follow losses in US banks Thursday, which fell even after US Treasury Secretary Janet Yellen told lawmakers that regulators would be prepared for further steps to protect deposits if needed.

Yellen’s reassurance came a day after market volatility triggered by her comments that said Treasury officials had neither considered nor examined the possibility of expanding federal insurance temporarily to all US bank deposits without congressional approval.

First Republic is on track for its third week of double-digit losses amid the upheaval in the industry. Shares have dropped about 90% this year and erased roughly $20 billion of market value. The swift demise of three US banks, including Silicon Valley Bank, spurred worries over liquidity and saw clients pull funds.