The banking crisis in the United States does not seem to be over yet: for the third time in a month, a medium-sized bank is on the verge of collapse. It is on the New York Stock Exchange share of the First Republic Bank collapsed like a house of cards after it emerged that depositors have withdrawn a whopping $ 100 billion from the San Francisco bank in the past month.
The First Republic Bank already ran into serious problems last month after fellow townsman Silicon Valley Bank (SVB) and New York’s Signature Bank went bankrupt. Eleven other banks then came to the rescue of the third problem bank with a capital injection of more than 30 billion dollars. Without that support, the First Republic Bank would also have collapsed immediately, according to new quarterly figures today.
This has therefore not been reassuring for customers. The outflow of savings is so great that frightened analysts advised investors to sell their shares in First Republic Bank. The plans to cut costs by laying off a quarter of the staff and selling poorly performing loans did not alleviate the concerns either.
Especially wealthy clients
After the stock market closed, the stock lost almost half its value. At $9.19, the stock was worth just a fraction of its near-$150 value two months ago at $9.19.
The First Republic Bank was founded in 1985 and mainly has wealthy clients. Facebook founder Mark Zuckerberg, among others, would bank there. Customers are concerned that assets in excess of $250,000 fall outside the U.S. Deposit Guarantee Scheme. If people have savings above this limit, it will all go up in smoke if the First Republic Bank goes bankrupt.
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