First Republic Downgraded by S&P for the Second Time in a Week

(Bloomberg) — First Republic Bank was downgraded again Sunday by S&P Global Inc., days after the ratings firm cut the lender to junk.

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S&P said it lowered First Republic’s long-term issuer credit rating to B+ from BB+, confirming an earlier Bloomberg report.

“Following Thursday’s uninsured deposit of $30 billion by the 11 largest banks in the country, together with cash on hand, First Republic Bank is well positioned to manage short-term deposit activity,” the company said in an emailed statement. “This support reflects confidence in First Republic and its ability to continue to provide unwavering exceptional service to its clients and communities.”

S&P downgraded First Republic to junk on Wednesday, lowering its rating to BB+ from A-. Moody’s followed suit on Friday in cutting the bank below investment grade.

In explaining its rationale for Sunday’s action, S&P said First Republic’s rating “remains on CreditWatch negative, indicating we could lower the rating further if the bank is unable to demonstrate some progress in stabilizing deposits and recovering the franchise value that, in our view, have likely eroded.”

“We do not view this deposit infusion — which has an initial maturity of 120 days — as a longer-term solution to the bank’s funding issues,” S&P analysts wrote. “Attracting meaningful deposits will be difficult, constraining the bank’s business position.”