US bank First Republic is currently in the spotlight as there are fears that it could be the next domino in a string of US crashes.

The bank’s shares fell 20% in the middle of today’s session on Wall Street. Yesterday, it recorded a loss of 21%, and since March 8, it has lost 73% of its value. The drop was even bigger, hitting 36%, after Bloomberg reported that First Republic was considering “strategic options” for its future, including a possible sale.

Shares bounced back slightly after the Wall Street Journal cited reports that other big banks, including JPMorgan Chase and Morgan Stanley, are trying to bail out First Republic and are discussing various alternatives, including increasing equity. And then he started taking profits after CNBC reported that banks were willing to lend him $20 billion.

Founded in 1985, San Francisco-headquartered First Republic is the 14th largest bank in the United States. It provides private banking services to individuals and corporations and manages assets with offices in California and the East Coast (New York, Massachusetts, Connecticut, Florida), as well as Oregon, Washington and Wyoming.

Until mid-2021, it was run solely by its founder Jim Herbert, who has now relinquished his position to CEO Mike Roffler but remains chairman of the board. It has recorded significant year-on-year growth, with assets at $22 billion at the end of 2010 and reaching $212 billion at the end of 2022.

However, the profile of his wealthy clientele turned into weakness after the failures of Silicon Valley Bank, Signature Bank and Silfergate, banks that invested in specific financial operations – SVB in technology, cryptocurrencies and two others.

According to S&P Global Ratings, 68% of First Republic deposits are in accounts above $250,000, an amount guaranteed by the authorities. While his clients come from a wide variety of sectors, some analysts fear that many will choose to move their money to larger, safer banks precisely because they are so important that regulators won’t let them fail.

The bank said it “boosted” its liquidity as of Sunday and had $70 billion on hand thanks to loans offered by the Fed and JPMorgan Chase. This amount, however, is considered insufficient by the rating agencies S&P Global Ratings and Fitch, which downgraded his credit rating on Wednesday, downgrading it to “junk” category.

“We believe that the risk of deposit leakage for First Republic Bank is high, despite the actions taken by banking regulators and the fact that the bank is increasing its lending capacity to limit the risk associated with last week’s failures,” S&P said in a statement. .

Source: APE-MPE, AFP.