
Uncertainty still surrounds the future of the US bank First Republicone more of US regional banks who found themselves at the epicenter of the recent banking crisis after the bankruptcy of Silvergate and Silicon Valley Bank.
First Republic has hired the investment firm Lazard as an advisor to consider all options, including selling its assets, selling the whole, or injecting capital.
Bloomberg analysts note that First Republic stubbornly refuses to become another victim of the banking crisis that has erupted in recent days with the bankruptcy of two regional American banks.
Investment company Lazard, together with JPMorgan Chase, will present a way out of the crisis to the US bank, which also hired McKinsey consulting for the same purpose. According to sources close to the discussion, who spoke to the Financial Times on condition of anonymity, the bank’s management has so far rejected the option of selling it.
However, according to Reuters sources, the bank seems to be considering selling its assets, including part of the loan portfolio, and reducing it. And while the discussion about its possible sale remains on the table, the First Republic is primarily considering the possibility of raising capital.
Margins are shrinking as a deal struck last week by 11 of the largest US banks on a $30 billion loan to First Republic failed to calm the market turmoil, leaving its stock unscathed. On Tuesday, the bank’s shares rose more than 30% after US Treasury Secretary Janet Yellen said the US government would support small banks. However, its shares fell at least 17% yesterday, while it has lost 80% of its value since the beginning of the month and has taken the biggest hit of any US bank shaken since the Silicon Valley Bank collapse.
Concerns about the future of yet another US bank concern the largest percentage of its clientele, about two-thirds of its clients at the end of last year, whose deposits exceed $250,000 and are therefore not covered by the US system. this protects deposits up to that amount.
Concern also prevails about the future of the First Republic’s long-term investments, as well as mortgages in its portfolio. As the Financial Times notes in its related report, most of these investments and these mortgages are now worth nothing compared to the face value they had when the bank bought them. The reason, of course, is the successive increases in interest rates that the Federal Reserve has made over the past year.
Last week, First Republic announced a reduction in borrowing and a review of the composition and size of its balance sheet. Since the beginning of the year, the beleaguered bank has lost about $70 billion of its deposits, which amounted to $176.4 billion.
Source: Kathimerini

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